Chapter 15, Problem 15.31BP

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: A common-size income statement and balance sheet for R Department Stores.

Requirement 2:

To determine

Company performance and Industry average:

To compare: The company’s profit percentage and financial position with the average for the industry.