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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Horizontal and Vertical Analysis

Venus Clothing Company specialties in selling apparel for special occasions. in 2018 and 2019, Venus’ account balances were as follows:

Chapter 12, Problem 59BE, Horizontal and Vertical Analysis Venus Clothing Company specialties in selling apparel for special

Required:

1. Calculate the change in each of the Venus accounts from 2018 102019.

2. Indicate what happened from 2018 to 2019 to accounts receivable and merchandise inventory as a percentage of total assets. Indicate what happened from 2018 to 2019 to cost of goods sold as a percentage of net sales.

To determine

(a)

Introduction:

Time Series analysis helps the companies to measure its performance across time or in other words it is a technique that helps a company to compare its present operational results and present financial position with that of previous years. There are two type of trend analysis i.e. horizontal and vertical analysis.

To calculate:

The difference between accounts receivable, merchandise inventory, total assets, net sales, cost of goods sold from 2018 to 2019.

Explanation

We will find the differences by subtracting the values of previous year from current year.

  • Accounts receivable = $45,000 - $ 32,000
  • = $13,000
  • Merchandise inventory = $9,000 - $...
To determine

(b)

Introduction:

Time Series analysis helps the companies to measure its performance across time or in other words it is a technique that helps a company to compare its present operational results and present financial position with that of previous years. There are two type of trend analysis i.e. horizontal and vertical analysis.

To find:

The percentage of account receivable and merchandise inventory to that of total assets and percentage of cost of goods sold to that of net sales.

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