When performing vertical analysis, each financial statement item is shown as a percentage of the base amount.
12) When performing vertical analysis on a balance, the current liabilities are compared typically to total liabilities.
13) When performing vertical analysis on a balance, share capital is calculated as a percentage of total shareholders' equity.
14) When performing vertical analysis on a balance, long term debt is calculated as a percentage of total liabilities and shareholders' equity.
15) When performing vertical analysis on a balance, cash is compared to the total current assets figure.
16) When performing vertical analysis on a balance, accounts receivable is calculated as a percentage of total assets.
17) Prepare a vertical analysis for Young's Point Corporation's balance sheet to determine the component percentages of its assets, liabilities, and shareholders' equity. Round percentages to the nearest one-tenth percent.
Young's Point Corporation
December 31, 2010
Total current assets$ 320,000
Property, plant, and equipment, net855,000
Total current liabilities$210,000
Total shareholders' equity$585,000
Total liabilities and shareholders' equity$1,275,000
18) Prepare vertical analysis calculations by filling in the far right column of the following balance sheet with the appropriate percentages.
December 31, 2011
Accounts receivable, net30,000
Total current assets$ 88,000
Property, plant, and equipment, net33,300
Short-term borrowings$ 28,400
Total current liabilities$ 48,400
Total liabilities$ 85,900
Total shareholders' equity$72,400
Total liabilities and shareholders' equity$158,300
19) Following is the income statement for Lovesick Lake Group Inc., for the year ended December 31, 2011:
Lovesick Lake Group Inc.
For the Year Ended December 31, 2011
Cost of goods sold$2,082,000
Income tax expense265,000
Net income$ 717,000
a. Prepare a vertical analysis of the income statement showing appropriate percentages for each item listed above. Round percentages to one-tenth percent.
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