Need help preparing vertical analysis in accounting?
1 year ago
THE ANSWER DISPLAYED FOR THIS PROBLEM ON THIS PAGE IS WRONG.THE FORMULA FOR VERTICAL IS AMOUNT / PREVIOUS YEAR OR(BASE YEAR) X 100. THE ANSWER IS WRONG BECAUSE THE PREVIOUS PERSON POSTED A HORIZONTAL ANALYSIS:present year - previous year x 100...SO THE ANSWER DISPLAYED IS WRONG CAUSE THEY DID HORIZONTAL AND NOT VERTICAL !!

TAG:accounting vertical previous present
Best Answer
Prepare a vertical analysis for 20X1 and 20X2.
Horizontal Analysis ............. ...........20x2 ........20x1...Difference.......%Change
Current Assets ............... ............$ 76,000 ...$ 80,000 .....- 4,000 ........ ...-5%*
Property, Plant, and Equipment (net) 99,000 .....90,000 .......9,000 ....... ....10%
Intangibles ............... ............. .......25,000...... 50,000 ....- 25,000 ..... ...- 50%
Total Assets .......... ......... ..........$200,000 ...$220,000 .... 20,000 .........-9.09%
Current Liabilities ............ ...............40,800 ......48,000 ....- 7,200 ..........-15%
Long-Term Liabilities ............ .........143,000 ....160,000 .. - 17,000 .........-10.63%
Total Liabilities ........ ........... .........$183,800 .$208,000 ...-24,200 .........- 11.63%
Stockholders’ Equity .......... ............ .16,200 .....12,000 ......4,200 ..........35%
Total Liabilities and SE ...... ........ ...$200,000 ..$220,000 ..-20,000 .........-9.09%

Net Sales ......... .......... .......... .......$500,000 .$500,000 ...... .....0
Cost of Goods Sold .............. .......... .332,500 .$350,000 ...-17,500 ....... ...-5%
Gross profit ............ ............ ..........$167,500..$150,000 .....17,500 ..........11.67%
Operating Expenses .......... ........ .....93,500 .....85,000 ......8,500 ........ ....10%
Net Income ............ ............ ...........$74,000....$65,000 .....9,000 ..... ........13.85%

*(4,000) / 80,000 = -5%
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