what does the percentages mean in vertical analysis? Year 4% of SalesYear 3% of Sales Assets Current Assets Cash $ 40,0006.67 $ 36,0006.67Marketable Securities 200003.3360001.11Accounts Receivable 540009.00460008.52Inventories 13500022.5014300026.48Prepaid Items 250004.17100001.85Total Assets current 27400045.6724100044.63Investments 270004.50200003.70plant net 27000045.0025500047.22Land 290004.83240004.44Total Assets $ 600,000100.00 $ 540,000100.00 Liabilities and Stock equity Liabilities Current Liabilities Notes payable $ 17,0002.83 $ 6,0001.11Accounts payable 11380018.9710000018.52salaries payable 210003.50150002.78Total current liabilities 15180025.3012100022.41Noncurrent liabilities Bonds payable 10000016.6710000018.52other 320005.33270005.00 total Non current liabilities 13200022.0012700023.52Total Liabilities 28380047.3024800045.93Stockholder's Equity Preferred stock 8000013.338000014.81Common stock 8000013.338000014.81Retained earnings 15620026.0313200024.44Total SE 31620052.7029200054.07Total Liabilities and SE $ 600,000100.00 $ 540,000100.00 Revenues Net sales $ 230,00096.64 $ 210,00097.67Other revenues 80003.365000023.26Total revenues 238000100.00215000100.00Expenses COGS 12000050.4210300047.91Selling expenses 5500023.115000023.26Interest expense 80003.3672003.35Interest tax expense 230009.662200010.23Total expenses 20600086.5518220084.74Net Income 3200013.453280015.26

Answered: what does the percentages mean in…

Fundamentals of Financial Management (MindTap Course List)

15th Edition

ISBN:9781337395250

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter4: Analysis Of Financial Statements

Section: Chapter Questions

Problem 24P: Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of...

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what does the percentages mean in vertical analysis?

		Year 4	% of Sales	Year 3	% of Sales

Assets
Current Assets
Cash		$ 40,000	6.67	$ 36,000	6.67
Marketable Securities	20000	3.33	6000	1.11
Accounts Receivable	54000	9.00	46000	8.52
Inventories	135000	22.50	143000	26.48
Prepaid Items	25000	4.17	10000	1.85
Total Assets current	274000	45.67	241000	44.63
Investments	27000	4.50	20000	3.70
plant net		270000	45.00	255000	47.22
Land		29000	4.83	24000	4.44
Total Assets	$ 600,000	100.00	$ 540,000	100.00


Liabilities and Stock equity
Liabilities
Current Liabilities
Notes payable	$ 17,000	2.83	$ 6,000	1.11
Accounts payable	113800	18.97	100000	18.52
salaries payable	21000	3.50	15000	2.78
Total current liabilities	151800	25.30	121000	22.41
Noncurrent liabilities
Bonds payable	100000	16.67	100000	18.52
other		32000	5.33	27000	5.00
total Non current liabilities	132000	22.00	127000	23.52
Total Liabilities	283800	47.30	248000	45.93
Stockholder's Equity
Preferred stock	80000	13.33	80000	14.81
Common stock	80000	13.33	80000	14.81
Retained earnings	156200	26.03	132000	24.44
Total SE		316200	52.70	292000	54.07
Total Liabilities and SE	$ 600,000	100.00	$ 540,000	100.00


Revenues
Net sales		$ 230,000	96.64	$ 210,000	97.67
Other revenues	8000	3.36	50000	23.26
Total revenues	238000	100.00	215000	100.00
Expenses
COGS		120000	50.42	103000	47.91
Selling expenses	55000	23.11	50000	23.26
Interest expense	8000	3.36	7200	3.35
Interest tax expense	23000	9.66	22000	10.23
Total expenses	206000	86.55	182200	84.74
Net Income	32000	13.45	32800	15.26

Expert Solution

Step 1: Introduction

Vertical analysis is also known as common-size analysis because it converts each line item on a financial statement into a percentage of a common base. This helps to highlight the relative size of each item and provides insights into trends and patterns.