Complete a vertical analysis of the following balance sheet:

Question

Balance sheet for vertical analysis showing assets and liabilities for 20X1 and 20X2.

Accepted Answer

Alright, so this is gonna be really similar to what we did in 20 X2, except we gotta change our base amount to the 20 X1 number, right? So we're no longer going to be using this 71707, we're going to be using this number over here. 70112, right? Same number down here for our liabilities and equity, that is gonna be our new base for this year. Cool? Alright. Let's go ahead and do it. 18514 in cash divided by the base of 70112. That's gonna give us 26.4%, right? 26.4% of our assets are cash. Let's do the same thing for accounts receivable, 18530 divided by our base of 70112 and that one pretty much is 26.4 as well. Right? So those numbers are pretty close. You can see that they're gonna be pretty much the same percentage. Alright. Let's keep going. Our inventory, 16028 divided by 70112. Whoops. And we get 22.9%. So notice inventory year over year, they're quite different than numbers. In 20X1, we had quite a good substantial chunk of our assets in inventory. And in 20X2, it's gone down quite a bit. Maybe we've become more efficient, right? Maybe we don't need to hold as much inventory because we've gotten better at managing our inventory. This could be a good thing. Cool. Let's go on with PPE. So PPE, property plant and equipment, 17 0 40 divided by our same base 701 1 1 2, and we get 24.3. So notice this one, we didn't have to do any special rounding because these numbers once we did our one decimal rounding, well, it still came out to a 100% when we added all 4 together. So good on us, we don't have to do any extra rounding there, And we get a 100% of our total assets are total assets. That makes sense. Cool. So let's do the same thing down here with accounts payable. And let me go ahead and just get out of the way. So I'm not there. Alright. Let's go ahead and do this one. So 13759, well, what's gonna be our base here? Same thing, right? 70112. Vertical analysis, so fun. Okay, 19.6%, cool. Alright, I'm gonna start stop writing all of this out and I'm just gonna give you the percentages here. So 6241 divided by our same base for accrued expenses, 8.9%. Going down long term debt, 25,000, well, 35 0.7%, right? 25,000 divided by our base. Keep going common stock, 1,000 divided by our base, and we get 1.4%. APIC, 19,000 divided by 20, by 70 Sorry. 19,000 divided by 7112. 70,000 112, and we get 27.1%, and finally retained earnings. So at this point, I would double check. I would do my calculation and then double check that I'm gonna total to a 100 percent. 5,112 divided by our base of 7,000,112 and we get 7.3%. And those numbers do add up to a 100, right? If we total all those up, we get a 100% and we are good to go. So let's do our final one and remember, this is just 7112 divided by 7112, and this will always be a 100% of itself. Cool? Alright. So that is how we do our vertical analysis here on a balance sheet. Sheet. A lit I guess a little more complicated than on the income statement because you just got to remember that it's the total assets or the total liabilities. Honestly, it's hard to say that that's very complicated at all. Right? So the main thing is being able to use this information now to make good decisions. Alright? Let's go ahead and move on to our next video.

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Complete a vertical analysis of the following balance sheet:

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