27th Edition
WARREN + 5 others
ISBN: 9781337272094




27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Vertical analysis of balance sheet

Balance sheet data for Alvarez Company on December 31, the end of two recent fiscal years, follow:

  Current Year Previous Year
Current assets $2,500,000 51.840,000
Property, plant, and equipment 5,600,000 6,072,000
Intangible assets 1,900,000 1,288,000
Current liabilities 2,000,000 1,380,000
Long-term liabilities 3,400,000 3,680,000
Common stock 920,000 920,000
Retained earnings 3,680,000 3,220,000

Prepare a comparative balance sheet for both years, stating each asset as a percent of total assets and each liability and stockholders’ equity item as a percent of the total liabilities and stockholders’ equity. Round percentages to one decimal place.

To determine

Vertical Analysis

Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount.


Vertical analysis percentage =(Specific itemBaseamount)×100

This analysis is otherwise called as common-size statement.

To prepare: Comparative balance sheet for the two-year period.

Given info: Balance sheet for the two year period.

Vertical analysis for income statement is performed by setting the Total assets and total liabilities as 1...

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