Complete The Vertical Analysis On The Balance Sheet

Sheet11 Complete The Vertical Analysis On The Balance Sheet For The N

Complete the vertical analysis on the balance sheet for the nursery for 2012. Note: Round the answers to the nearest tenth. Assets Amount Percent Cash $9,226 _____% Accounts Receivable $7,128 _____% Merchandise Inventory $17,814 _____% Total Assets $34,168.00 _____% Liabilities Accounts Payable $9,917 _____% Wage Payable $3,257 _____% Total Liability $13,174 _____% Owners Equity The Owner's Capital $20,994 _____% Total Liabilities and Owner's Capital $34,168 _____%

Paper For Above instruction

The task involves performing a vertical analysis of the nursery's balance sheet for the year 2012. Vertical analysis expresses each item on a financial statement as a percentage of a base figure—in this case, total assets for the balance sheet. This process allows for straightforward comparison across periods or companies by normalizing the data.

To conduct the vertical analysis, each component of the balance sheet must be divided by total assets, then multiplied by 100 to convert to a percentage. The calculations are as follows:

  • Cash: \( \frac{\$9,226}{\$34,168} \times 100 \approx 27.0\% \)
  • Accounts Receivable: \( \frac{\$7,128}{\$34,168} \times 100 \approx 20.8\% \)
  • Merchandise Inventory: \( \frac{\$17,814}{\$34,168} \times 100 \approx 52.2\% \)
  • Total Assets: Since total assets are the base, this is 100% by definition.
  • Accounts Payable: \( \frac{\$9,917}{\$34,168} \times 100 \approx 29.1\% \)
  • Wage Payable: \( \frac{\$3,257}{\$34,168} \times 100 \approx 9.5\% \)
  • Total Liabilities: \( \frac{\$13,174}{\$34,168} \times 100 \approx 38.6\% \)
  • Owner's Capital: \( \frac{\$20,994}{\$34,168} \times 100 \approx 61.4\% \)

These percentages give insights into the proportion of each asset and liability relative to the whole, highlighting the financial structure of the nursery. For example, over half of the nursery's assets are inventory, which indicates a focus on physical stock, while the liabilities constitute about 39%, reflecting the indebtedness relative to ownership equity.

Additional analysis involves completing similar calculations for other financial statements, such as income statements, or conducting further ratio analyses for liquidity, efficiency, and profitability, which are essential for comprehensive financial assessment.

References

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