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  • Mar 18, 2008, 05:50 PM
    uscchick2008
    Financial statement analysis
    I got a question for homework that requested that we perform a vertical analysis of the balance sheet however all I got were the assets , liabilities and equity how am I supposed to find the percentage of its assets and it was not given?? :mad:
  • Mar 18, 2008, 05:56 PM
    ChaliceHolder
    Assets = Liabilities + Equity
    To do an analysis you can find out various ratios, like the Quick ratio, the Current Ratio, the times interest-interest-earned ratio, the Return on Investment ratio, etc.
  • Mar 20, 2008, 03:05 PM
    morgaine300
    You're saying you "only" got assets, liabilities and equity. That's everything a balance sheet should contain, so you have what you need.

    A vertical analysis is comparing everything as a percent of the totals. Remember that one half of your Balance Sheet is the assets. So each asset is presented as a percent of the total assets, by dividing each one by the total assets. Then total assets will be 100%.

    The other half of your Balance Sheet is total liabilities and equity. So each number in that portion is a percent of the total liabilities and equity, again by dividing each one.

    So you have something that looks like:
    Assets:
    Cash $10 1.9%
    A/R $30 5.5%
    Supplies $5 .9%
    Land $200 36.7%
    Building $300 55%
    Totals $545 100%

    Liab & Equity:
    A/P $25 4.6%
    N/P $100 18.3%
    Capital $420 77.1%
    Totals $545 100%

    Yeah, I know the columns don't look so hot, but that gives you an idea.

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