Chapter 15, Problem 15.25AP

Requirement 1:

To determine

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:

$\text{Vertical analysis percentage }=\left(\frac{\text{Specific item}}{\text{Base}\text{amount}}\right)\times 100$

This analysis is otherwise called as common-size statement.

To Prepare: Common-size income statement and balance sheet for K Department Stores.

Requirement 2:

To determine

Profitability analysis

Requirement 3:

To determine

To compute: Current ratio and debt-to-equity ratio