Vertical analysis: Vertical analysis is the method of financial statement analysis, and it is useful to evaluating a company’s performance and financial condition. Vertical analysis is helpful for analyzing the changes in the financial statements over the time, and comparing the each item on a financial statement with a total amount from the same statement. In the vertical analysis, the financial statements are analyzed in the following manner: In vertical analysis of a balance sheet , each asset item is stated as a percent of the total asset, and each liability and owner’s equity item is stated as a percent of total liabilities and owner’s equity. In vertical analysis of an income statement , each item of revenue and expense is stated as a percent of total revenues of the business. To determine: The amount and percentage of change in the net income from year 1 to year 2.

Question

Want to see the full answer?

Answer 1

Question

Chapter 3, Problem 3.28EX

(a)

To determine

Vertical analysis:

Vertical analysis is the method of financial statement analysis, and it is useful to evaluating a company’s performance and financial condition. Vertical analysis is helpful for analyzing the changes in the financial statements over the time, and comparing the each item on a financial statement with a total amount from the same statement. In the vertical analysis, the financial statements are analyzed in the following manner:

In vertical analysis of a balance sheet, each asset item is stated as a percent of the total asset, and each liability and owner’s equity item is stated as a percent of total liabilities and owner’s equity.

In vertical analysis of an income statement, each item of revenue and expense is stated as a percent of total revenues of the business.

To determine: The amount and percentage of change in the net income from year 1 to year 2.

(b)

To determine

The percentage relationship between net income and sales of year 2 and year 1.

(c)

To determine

To explain: The conclusion drawn from the analysis.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Can you solve this financial accounting problem with appropriate steps and explanations?

Tennyson reported sales for the year ended March 31, 2021, of $5,320,000. All sales are on credit.

I need help finding the accurate solution to this general accounting problem ith valid methods.

Answer 2

Question

Chapter 3, Problem 3.28EX

(a)

To determine

Vertical analysis:

Vertical analysis is the method of financial statement analysis, and it is useful to evaluating a company’s performance and financial condition. Vertical analysis is helpful for analyzing the changes in the financial statements over the time, and comparing the each item on a financial statement with a total amount from the same statement. In the vertical analysis, the financial statements are analyzed in the following manner:

In vertical analysis of a balance sheet, each asset item is stated as a percent of the total asset, and each liability and owner’s equity item is stated as a percent of total liabilities and owner’s equity.

In vertical analysis of an income statement, each item of revenue and expense is stated as a percent of total revenues of the business.

To determine: The amount and percentage of change in the net income from year 1 to year 2.

(b)

To determine

The percentage relationship between net income and sales of year 2 and year 1.

(c)

To determine

To explain: The conclusion drawn from the analysis.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 3, Problem 3.28EX

(a)

To determine

Vertical analysis:

Vertical analysis is the method of financial statement analysis, and it is useful to evaluating a company’s performance and financial condition. Vertical analysis is helpful for analyzing the changes in the financial statements over the time, and comparing the each item on a financial statement with a total amount from the same statement. In the vertical analysis, the financial statements are analyzed in the following manner:

In vertical analysis of a balance sheet, each asset item is stated as a percent of the total asset, and each liability and owner’s equity item is stated as a percent of total liabilities and owner’s equity.

In vertical analysis of an income statement, each item of revenue and expense is stated as a percent of total revenues of the business.

To determine: The amount and percentage of change in the net income from year 1 to year 2.

(b)

To determine

The percentage relationship between net income and sales of year 2 and year 1.

(c)

To determine

To explain: The conclusion drawn from the analysis.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 3, Problem 3.28EX

(a)

To determine

Vertical analysis:

Vertical analysis is the method of financial statement analysis, and it is useful to evaluating a company’s performance and financial condition. Vertical analysis is helpful for analyzing the changes in the financial statements over the time, and comparing the each item on a financial statement with a total amount from the same statement. In the vertical analysis, the financial statements are analyzed in the following manner:

In vertical analysis of a balance sheet, each asset item is stated as a percent of the total asset, and each liability and owner’s equity item is stated as a percent of total liabilities and owner’s equity.

In vertical analysis of an income statement, each item of revenue and expense is stated as a percent of total revenues of the business.

To determine: The amount and percentage of change in the net income from year 1 to year 2.

(b)

To determine

The percentage relationship between net income and sales of year 2 and year 1.

(c)

To determine

To explain: The conclusion drawn from the analysis.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 3, Problem 3.28EX

(a)

To determine

Vertical analysis:

Vertical analysis is the method of financial statement analysis, and it is useful to evaluating a company’s performance and financial condition. Vertical analysis is helpful for analyzing the changes in the financial statements over the time, and comparing the each item on a financial statement with a total amount from the same statement. In the vertical analysis, the financial statements are analyzed in the following manner:

In vertical analysis of a balance sheet, each asset item is stated as a percent of the total asset, and each liability and owner’s equity item is stated as a percent of total liabilities and owner’s equity.

In vertical analysis of an income statement, each item of revenue and expense is stated as a percent of total revenues of the business.

To determine: The amount and percentage of change in the net income from year 1 to year 2.

(b)

To determine

The percentage relationship between net income and sales of year 2 and year 1.

(c)

To determine

To explain: The conclusion drawn from the analysis.

Answer 6

Chapter 3, Problem 3.28EX

(a)

To determine

Vertical analysis:

Vertical analysis is the method of financial statement analysis, and it is useful to evaluating a company’s performance and financial condition. Vertical analysis is helpful for analyzing the changes in the financial statements over the time, and comparing the each item on a financial statement with a total amount from the same statement. In the vertical analysis, the financial statements are analyzed in the following manner:

In vertical analysis of a balance sheet, each asset item is stated as a percent of the total asset, and each liability and owner’s equity item is stated as a percent of total liabilities and owner’s equity.

In vertical analysis of an income statement, each item of revenue and expense is stated as a percent of total revenues of the business.

To determine: The amount and percentage of change in the net income from year 1 to year 2.

Answer 7

Chapter 3, Problem 3.28EX

(a)

To determine

Vertical analysis:

Vertical analysis is the method of financial statement analysis, and it is useful to evaluating a company’s performance and financial condition. Vertical analysis is helpful for analyzing the changes in the financial statements over the time, and comparing the each item on a financial statement with a total amount from the same statement. In the vertical analysis, the financial statements are analyzed in the following manner:

In vertical analysis of a balance sheet, each asset item is stated as a percent of the total asset, and each liability and owner’s equity item is stated as a percent of total liabilities and owner’s equity.

In vertical analysis of an income statement, each item of revenue and expense is stated as a percent of total revenues of the business.

To determine: The amount and percentage of change in the net income from year 1 to year 2.

Answer 8

(b)

To determine

The percentage relationship between net income and sales of year 2 and year 1.

Answer 9

(b)

To determine

The percentage relationship between net income and sales of year 2 and year 1.

Answer 10

(c)

To determine

To explain: The conclusion drawn from the analysis.

Answer 11

(c)

To determine

To explain: The conclusion drawn from the analysis.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 3 - How are revenues and expenses reported on the...Ch. 3 - Is the matching concept related to (A) the cash...Ch. 3 - Why are adjusting entries needed at the end of an...Ch. 3 - What is the difference between adjusting entries...Ch. 3 - Identify the four different categories of...Ch. 3 - If the effect of the debit portion of an adjusting...Ch. 3 - If the effect of the credit portion of an...Ch. 3 - Does every adjusting entry have an effect on...Ch. 3 - Prob. 9DQ Ch. 3 - (A) Explain the purpose of the two accounts:...

Solution Summary: The author explains vertical analysis as the method of financial statement analysis, which is useful for evaluating a company's performance and financial condition.

Concept explainers

Videos

The percentage relationship between net income and sales of year 2 and year 1.

To explain: The conclusion drawn from the analysis.

Want to see the full answer?

Chapter 3 Solutions