Horizontal Analysis and Vertical Analysis Horizontal Analysis: Horizontal analysis is prepared to make comparison between the financial statements to determine the changes in the financial statements for the previous year to the current year. The changes of the company are measured in dollars as well as in percentage. Formula: Percentage Change = 100 × Later Period Amount − Base Period Amount Base Period Amount Vertical Analysis: Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount. Use the following formula to calculate vertical analysis percentage: Formula: Vertical analysis percentage = ( Specific item Base amount ) × 100 This analysis is otherwise called as common-size statement. To prepare: Horizontal analysis of Corporation N’s Comparative Balance Sheets data for 2016 and 2017.

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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.

Chapter 13, Problem 13.5E

a)

To determine

Horizontal Analysis and Vertical Analysis

Horizontal Analysis: Horizontal analysis is prepared to make comparison between the financial statements to determine the changes in the financial statements for the previous year to the current year. The changes of the company are measured in dollars as well as in percentage.

Formula:

Percentage Change=100×Later Period Amount −Base Period AmountBase Period Amount

Vertical Analysis: Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount. Use the following formula to calculate vertical analysis percentage:

Formula:

Vertical analysis percentage =(Specific itemBase amount)×100

This analysis is otherwise called as common-size statement.

To prepare: Horizontal analysis of Corporation N’s Comparative Balance Sheets data for 2016 and 2017.

b)

To determine

To prepare: Vertical analysis of Corporation N’s comparative condensed balance sheet data for 2017.

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Financing Deficit Stevens Textile Corporation's 2019 financial statements are shown below: Just need the correct LOC? Balance Sheet as of December 31, 2019 (Thousands of Dollars) Cash $ 1,080 Accounts payable $ 4,320 Receivables 6,480 Accruals 2,880 Inventories 9,000 Line of credit 0 Total current assets $16,560 Notes payable 2,100 Net fixed assets 12,600 Total current liabilities $ 9,300 Mortgage bonds 3,500 Common stock 3,500 Retained earnings 12,860 Total assets $29,160 Total liabilities and equity $29,160 Income Statement for December 31, 2019 (Thousands of Dollars) Sales $36,000 Operating costs 34,000 Earnings before interest and taxes $ 2,000 Interest 160 Pre-tax earnings $ 1,840 Taxes (25%) 460 Net income $ 1,380 Dividends (40%) $ 552 Addition to retained earnings $ 828 Stevens grew rapidly in 2019 and financed the growth with notes payable and long-term bonds. Stevens expects sales to…

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Answer 2

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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.

Chapter 13, Problem 13.5E

a)

To determine

Horizontal Analysis and Vertical Analysis

Horizontal Analysis: Horizontal analysis is prepared to make comparison between the financial statements to determine the changes in the financial statements for the previous year to the current year. The changes of the company are measured in dollars as well as in percentage.

Formula:

Percentage Change=100×Later Period Amount −Base Period AmountBase Period Amount

Vertical Analysis: Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount. Use the following formula to calculate vertical analysis percentage:

Formula:

Vertical analysis percentage =(Specific itemBase amount)×100

This analysis is otherwise called as common-size statement.

To prepare: Horizontal analysis of Corporation N’s Comparative Balance Sheets data for 2016 and 2017.

b)

To determine

To prepare: Vertical analysis of Corporation N’s comparative condensed balance sheet data for 2017.

Expert Solution & Answer

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Answer 3

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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.

Chapter 13, Problem 13.5E

a)

To determine

Horizontal Analysis and Vertical Analysis

Horizontal Analysis: Horizontal analysis is prepared to make comparison between the financial statements to determine the changes in the financial statements for the previous year to the current year. The changes of the company are measured in dollars as well as in percentage.

Formula:

Percentage Change=100×Later Period Amount −Base Period AmountBase Period Amount

Vertical Analysis: Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount. Use the following formula to calculate vertical analysis percentage:

Formula:

Vertical analysis percentage =(Specific itemBase amount)×100

This analysis is otherwise called as common-size statement.

To prepare: Horizontal analysis of Corporation N’s Comparative Balance Sheets data for 2016 and 2017.

b)

To determine

To prepare: Vertical analysis of Corporation N’s comparative condensed balance sheet data for 2017.

Expert Solution & Answer

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Answer 4

Question

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.

Chapter 13, Problem 13.5E

a)

To determine

Horizontal Analysis and Vertical Analysis

Horizontal Analysis: Horizontal analysis is prepared to make comparison between the financial statements to determine the changes in the financial statements for the previous year to the current year. The changes of the company are measured in dollars as well as in percentage.

Formula:

Percentage Change=100×Later Period Amount −Base Period AmountBase Period Amount

Vertical Analysis: Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount. Use the following formula to calculate vertical analysis percentage:

Formula:

Vertical analysis percentage =(Specific itemBase amount)×100

This analysis is otherwise called as common-size statement.

To prepare: Horizontal analysis of Corporation N’s Comparative Balance Sheets data for 2016 and 2017.

b)

To determine

To prepare: Vertical analysis of Corporation N’s comparative condensed balance sheet data for 2017.

Expert Solution & Answer

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Answer 5

Chapter 13, Problem 13.5E

a)

To determine

Horizontal Analysis and Vertical Analysis

Horizontal Analysis: Horizontal analysis is prepared to make comparison between the financial statements to determine the changes in the financial statements for the previous year to the current year. The changes of the company are measured in dollars as well as in percentage.

Formula:

Percentage Change=100×Later Period Amount −Base Period AmountBase Period Amount

Vertical Analysis: Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount. Use the following formula to calculate vertical analysis percentage:

Formula:

Vertical analysis percentage =(Specific itemBase amount)×100

This analysis is otherwise called as common-size statement.

To prepare: Horizontal analysis of Corporation N’s Comparative Balance Sheets data for 2016 and 2017.

b)

To determine

To prepare: Vertical analysis of Corporation N’s comparative condensed balance sheet data for 2017.

Answer 6

Chapter 13, Problem 13.5E

a)

To determine

Horizontal Analysis and Vertical Analysis

Horizontal Analysis: Horizontal analysis is prepared to make comparison between the financial statements to determine the changes in the financial statements for the previous year to the current year. The changes of the company are measured in dollars as well as in percentage.

Formula:

Percentage Change=100×Later Period Amount −Base Period AmountBase Period Amount

Vertical Analysis: Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount. Use the following formula to calculate vertical analysis percentage:

Formula:

Vertical analysis percentage =(Specific itemBase amount)×100

This analysis is otherwise called as common-size statement.

To prepare: Horizontal analysis of Corporation N’s Comparative Balance Sheets data for 2016 and 2017.

Answer 7

Chapter 13, Problem 13.5E

a)

To determine

Horizontal Analysis and Vertical Analysis

Horizontal Analysis: Horizontal analysis is prepared to make comparison between the financial statements to determine the changes in the financial statements for the previous year to the current year. The changes of the company are measured in dollars as well as in percentage.

Formula:

Percentage Change=100×Later Period Amount −Base Period AmountBase Period Amount

Vertical Analysis: Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount. Use the following formula to calculate vertical analysis percentage:

Formula:

Vertical analysis percentage =(Specific itemBase amount)×100

This analysis is otherwise called as common-size statement.

To prepare: Horizontal analysis of Corporation N’s Comparative Balance Sheets data for 2016 and 2017.

Answer 8

b)

To determine

To prepare: Vertical analysis of Corporation N’s comparative condensed balance sheet data for 2017.

Answer 9

b)

To determine

To prepare: Vertical analysis of Corporation N’s comparative condensed balance sheet data for 2017.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 13 - Prob. 1Q Ch. 13 - Prob. 2Q Ch. 13 - Prob. 3Q Ch. 13 - Prob. 4Q Ch. 13 - Prob. 5Q Ch. 13 - Prob. 6Q Ch. 13 - Prob. 7Q Ch. 13 - Prob. 8Q Ch. 13 - Prob. 9Q Ch. 13 - (a) Distinguish among the following bases of...

Solution Summary: The author explains how Horizontal Analysis and Vertical Analysis are prepared to analyze the relationship among various financial statements with a particular base amount.

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To prepare: Vertical analysis of Corporation N’s comparative condensed balance sheet data for 2017.

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