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Financial Accounting

15th Edition
Carl Warren + 2 others
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
ISBN: 9781337272124
Textbook Problem
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Performing vertical analysis

The Roost Department Stores, Inc. chief executive officer (CEO) has asked you to compare the company’s profit performance and financial position with the averages for the industry. The CEO has given you the company's income statement and balance sheet as well as the industry average data for retailers.

Chapter 17, Problem 4CP, Performing vertical analysis The Roost Department Stores, Inc. chief executive officer (CEO) has

Requirements

  1. 1. Prepare a vertical analysis for Roost for both its income statement and balance sheet.
  2. 2. Compare the company’s profit performance and financial position with the average for the industry.

To determine

Prepare a common-size income statement and balance sheet for R.

Explanation

Vertical analysis: Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount. Use the following formula to calculate vertical analysis percentage:

Vertical analysis percentage =(Specific itemBaseamount)×100

This analysis is otherwise called as common-size statement

2)

To determine

Compare financial performance of the three companies.

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