I preformed a vertical analysis on the following data. I guess my confusion exac
ID: 2804394 • Letter: I
Question
I preformed a vertical analysis on the following data. I guess my confusion exactly is what this means. What do you see from the data
Balance Sheet
Income Statement
ASSETS Current assets: Cash and cash equivalents $2,128.80 14.86% $1,530.10 12.32% $1,708.40 15.89% Short-term investments 134.40 0.94% 81.30 0.65% 135.40 1.26% Accounts receivable, net 768.80 0.053651558 719.00 5.79% 631.00 5.87% Inventories 1,378.50 9.62% 1,306.40 10.52% 1,090.90 10.15% Prepaid expenses and other current assets 350.00 2.44% 334.20 2.69% 285.60 2.66% Total current assets 4,760.50 33.22% 3,971.00 31.98% 3,851.30 35.82% Long-term investments 1,141.70 7.97% 312.50 2.52% 318.40 2.96% Equity and cost investments 354.50 2.47% 352.00 2.83% 514.90 4.79% Property, plant and equipment, net 4,533.80 31.64% 4,088.30 32.93% 3,519.00 32.73% Deferred income taxes, net 885.40 6.18% 1,180.80 9.51% 1,220.70 11.35% Other long-term assets 417.70 2.91% 415.90 3.35% 198.90 1.85% Other intangible assets 516.30 3.60% 520.40 4.19% 273.50 2.54% Goodwill 1,719.60 12.00% 1,575.40 12.69% 856.20 7.96% TOTAL ASSETS $14,329.50 100.00% $12,416.30 100.00% $10,752.90 100.00% LIABILITIES AND EQUITY Current liabilities: Accounts payable $730.60 0.050985729 $684.20 5.51% $533.70 4.96% Accrued liabilities 1,999.10 13.95% 1,755.30 14.14% 1,514.40 14.08% Insurance reserves 246.00 1.72% 224.80 1.81% 196.10 1.82% Stored value card liability 1,171.20 8.17% 983.80 7.92% 794.50 7.39% Current portion of long-term debt 400.00 2.79% 0.00 0.00% 0.00 0.00% Total current liabilities 4,546.90 31.73% 3,648.10 29.38% 3,038.70 28.26% Long-term debt 3,202.20 22.35% 2,347.50 18.91% 2,048.30 19.05% Other long-term liabilities 689.70 0.048131477 600.90 4.84% 392.20 3.65% Total liabilities 8,438.80 58.89% 6,596.50 53.13% 5,479.20 50.96% Shareholders equity: Common stock ($0.001 par value) authorized, 1.50 0.01% 1.50 0.01% 0.70 0.01% 2,400.0 shares; issued and outstanding, 1,485.1 and 1,499.1 shares, respectively Additional paid-in capital 41.10 0.29% 41.10 0.33% 39.40 0.37% Retained earnings 5,949.80 41.52% 5,974.80 48.12% 5,206.60 48.42% Accumulated other comprehensive income/(loss) (108.40) -0.76% (199.40) -1.61% 25.30 0.24% Total shareholders equity 5,884.00 0.410621445 5,818.00 46.86% 5,272.00 49.03% Noncontrolling interest 6.70 0.05% 1.80 0.01% 1.70 0.02% Total equity 5,890.70 41.11% 5,819.80 46.87% 5,273.70 49.04% TOTAL LIABILITIES AND EQUITY $14,329.50 100.00% $12,416.30 100.00% $10,752.90 100.00%Explanation / Answer
Vertical analysis of financial statements is to show the relative sizes of all accounts on the financial statements. When vertical analysis is done on an income statement, total sales is represented as 100% and all other figures are represented as a percentage of sales. For Balance sheet analyiss, the total asset is represented as 100% and all other figures are represented as a percentage of total assets. A common size income statement and balance sheet would enable us to compare the increase/decrease in cost component across the years. Vertical analysis is also helpful in determining key trends. For instance, the vertical analysis of income statement (as given above) shows that thw contribution to sales from licensed stores is increasing over the years, and CPG foodservices contribution is decresing, albeit marginally over the years. Total operating expenses have declined slightly year on year whereas genenral and administrative expenses have increased. In the balance sheet, account receivables have decreased indicating a better collection during the year. Also, total current assets declined during the year whereas the current liabilities have increased. This would imapct the current ratio of the company. Further, long term debt has increased during the year.