What does the vertical analysis reveal on ABC Corporation in terms of Statement of Financial Position COMMON-SIZE COMPARATIVE STATEMENT OF FINANCIAL POSITIONDECEMBER 31, 2024 AND 2025COMMON SIZEPERCENTAGE20252024AssetsCurrent AssetsCash & Cash Equivalent10.5310.50Trade & Other Receivables32.3128.71Inventory33.0230.80Prepaid Expense10.0211.88Total Current Assets85.8781.99Noncurrent AssetaProperty, Plant & EquipmentIntangibles13.3917.230.740.78Total Noncurrent Assets14.1318.01TOTAL ASSETS100.00100.00LIABILITIES AND SHAREHOLDER'S EQUITYCurrent LiabilitiesTrade & Other Payables23.4721.60Unearned Revenues10.608.53Notes Payable- Current4.444.66Total Current Liabilities38.5134.79Noncurrent LiabilitiesNotes Payable - noncurrent20.5526.23Total Liabilities59.0661.02Shareholders' EquityPreference SharesP100 par10.3510.87Ordinary Shares, P1 parPremium on Ordinary SharesTotal Paid-in-Capital1.481.5513.3113.9725.1526.39Retained EarningsTotal Shareholder's Equity15.7912.5940.9438.98TOTAL LIABILITIES & SHAREWHOLDERS' EQUITY100.00100.00

Answer: Vertical analysis of financial statements is an approach to explain relationship between…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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What does the vertical analysis reveal on ABC Corporation in terms of Statement of Financial Position

COMMON-SIZE COMPARATIVE STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 2024 AND 2025
COMMON SIZE
PERCENTAGE
2025
2024
Assets
Current Assets
Cash & Cash Equivalent
10.53
10.50
Trade & Other Receivables
32.31
28.71
Inventory
33.02
30.80
Prepaid Expense
10.02
11.88
Total Current Assets
85.87
81.99
Noncurrent Asseta
Property, Plant & Equipment
Intangibles
13.39
17.23
0.74
0.78
Total Noncurrent Assets
14.13
18.01
TOTAL ASSETS
100.00
100.00
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Trade & Other Payables
23.47
21.60
Unearned Revenues
10.60
8.53
Notes Payable- Current
4.44
4.66
Total Current Liabilities
38.51
34.79
Noncurrent Liabilities
Notes Payable - noncurrent
20.55
26.23
Total Liabilities
59.06
61.02
Shareholders' Equity
Preference Shares
P100 par
10.35
10.87
Ordinary Shares, P1 par
Premium on Ordinary Shares
Total Paid-in-Capital
1.48
1.55
13.31
13.97
25.15
26.39
Retained Earnings
Total Shareholder's Equity
15.79
12.59
40.94
38.98
TOTAL LIABILITIES & SHAREWHOLDERS' EQUITY
100.00
100.00

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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