Vertical analysis Vertical analysis is the method of financial statement analysis, and it is useful for evaluating company’s performance and financial condition. Vertical analysis is helpful for analyzing the changes in the financial statements over the time, and comparing each item on a financial statement with a total amount from the same statement. EBITDA: EBITA is operating income that is expressed by adding back depreciation and amortization expenses. This amount termed as Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA). In the EBITDA calculation, fixed expenses and non-cash items are not considered. To prepare: A vertical analysis of the sales as a percent of total sales for the five segments.

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Answer 1

Question

Chapter 6, Problem 1ADM

A.

To determine

Vertical analysis

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

EBITDA:

EBITA is operating income that is expressed by adding back depreciation and amortization expenses. This amount termed as Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA). In the EBITDA calculation, fixed expenses and non-cash items are not considered.

To prepare: A vertical analysis of the sales as a percent of total sales for the five segments.

B.

To determine

The earnings before interest, taxes, depreciation, and amortization (EBITDA) for the five segments.

C.

To determine

The EBITDA as a percent of sales (EBITDA margin) for the five segments.

D.

To determine

To interpret: The analysis in EBITDA margin calculated in Part C.

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Answer 2

Question

Chapter 6, Problem 1ADM

A.

To determine

Vertical analysis

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

EBITDA:

EBITA is operating income that is expressed by adding back depreciation and amortization expenses. This amount termed as Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA). In the EBITDA calculation, fixed expenses and non-cash items are not considered.

To prepare: A vertical analysis of the sales as a percent of total sales for the five segments.

B.

To determine

The earnings before interest, taxes, depreciation, and amortization (EBITDA) for the five segments.

C.

To determine

The EBITDA as a percent of sales (EBITDA margin) for the five segments.

D.

To determine

To interpret: The analysis in EBITDA margin calculated in Part C.

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Answer 3

Question

Chapter 6, Problem 1ADM

A.

To determine

Vertical analysis

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

EBITDA:

EBITA is operating income that is expressed by adding back depreciation and amortization expenses. This amount termed as Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA). In the EBITDA calculation, fixed expenses and non-cash items are not considered.

To prepare: A vertical analysis of the sales as a percent of total sales for the five segments.

B.

To determine

The earnings before interest, taxes, depreciation, and amortization (EBITDA) for the five segments.

C.

To determine

The EBITDA as a percent of sales (EBITDA margin) for the five segments.

D.

To determine

To interpret: The analysis in EBITDA margin calculated in Part C.

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Answer 4

Question

Chapter 6, Problem 1ADM

A.

To determine

Vertical analysis

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

EBITDA:

EBITA is operating income that is expressed by adding back depreciation and amortization expenses. This amount termed as Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA). In the EBITDA calculation, fixed expenses and non-cash items are not considered.

To prepare: A vertical analysis of the sales as a percent of total sales for the five segments.

B.

To determine

The earnings before interest, taxes, depreciation, and amortization (EBITDA) for the five segments.

C.

To determine

The EBITDA as a percent of sales (EBITDA margin) for the five segments.

D.

To determine

To interpret: The analysis in EBITDA margin calculated in Part C.

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Answer 5

Chapter 6, Problem 1ADM

A.

To determine

Vertical analysis

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

EBITDA:

EBITA is operating income that is expressed by adding back depreciation and amortization expenses. This amount termed as Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA). In the EBITDA calculation, fixed expenses and non-cash items are not considered.

To prepare: A vertical analysis of the sales as a percent of total sales for the five segments.

B.

To determine

The earnings before interest, taxes, depreciation, and amortization (EBITDA) for the five segments.

C.

To determine

The EBITDA as a percent of sales (EBITDA margin) for the five segments.

D.

To determine

To interpret: The analysis in EBITDA margin calculated in Part C.

Answer 6

Chapter 6, Problem 1ADM

A.

To determine

Vertical analysis

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

EBITDA:

EBITA is operating income that is expressed by adding back depreciation and amortization expenses. This amount termed as Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA). In the EBITDA calculation, fixed expenses and non-cash items are not considered.

To prepare: A vertical analysis of the sales as a percent of total sales for the five segments.

Answer 7

Chapter 6, Problem 1ADM

A.

To determine

Vertical analysis

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

EBITDA:

EBITA is operating income that is expressed by adding back depreciation and amortization expenses. This amount termed as Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA). In the EBITDA calculation, fixed expenses and non-cash items are not considered.

To prepare: A vertical analysis of the sales as a percent of total sales for the five segments.

Answer 8

B.

To determine

The earnings before interest, taxes, depreciation, and amortization (EBITDA) for the five segments.

Answer 9

B.

To determine

The earnings before interest, taxes, depreciation, and amortization (EBITDA) for the five segments.

Answer 10

C.

To determine

The EBITDA as a percent of sales (EBITDA margin) for the five segments.

Answer 11

C.

To determine

The EBITDA as a percent of sales (EBITDA margin) for the five segments.

Answer 12

D.

To determine

To interpret: The analysis in EBITDA margin calculated in Part C.

Answer 13

D.

To determine

To interpret: The analysis in EBITDA margin calculated in Part C.

Answer 14

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Answer 15

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Answer 16

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Answer 17

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Solution Summary: The author explains how vertical analysis is useful for evaluating company's performance and financial condition.

The earnings before interest, taxes, depreciation, and amortization (EBITDA) for the five segments.

The EBITDA as a percent of sales (EBITDA margin) for the five segments.

To interpret: The analysis in EBITDA margin calculated in Part C.

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Chapter 6 Solutions