II.Vertical AnalysisVertical Analysis shows the relationshipof each item to the total within a singlestatement.In vertical analysis of the balance sheet, thetotal assets and total liabilities andare expressed as 100%owner'sequityIn vertical analysis of income statement,.netsales is expressed as 100%11
11 Ⅱ.Vertical Analysis ⚫ Vertical Analysis shows the relationship of each item to the total within a single statement. ⚫ In vertical analysis of the balance sheet, the total assets and total liabilities and owner’s equity are expressed as 100%. ⚫ In vertical analysis of income statement, net sales is expressed as 100%
Value CityBalance SheetDecember 31.20092009PercentageAssetsCash14.85%77,00040.22%Supplies208,6002.08%10,800AccountsReceivablePPE222.20042.85%100%Total assets518,60012
12 2009 Percentage Assets Cash 77,000 14.85% Supplies 208,600 40.22% Accounts Receivable 10,800 2.08% PPE 222,200 42.85% Total assets 518,600 100% Value City Balance Sheet December 31,2009
Value CityBalance SheetDecember31.20092009PercentageLiabilities and Owner's EquityLiabilities287,20055.38%Accounts Payable59,80011.53%NotesPayable2.28%11.800Long-term liability358,80069.19%Total LiabilitiesEquity27,5005.30%Paid-in Capital25.51%RetainedEarnings132.30030.81%Total Equity159.800100%Total Liabilities and518.60013Owner'sEquity
13 2009 Percentage Liabilities and Owner’s Equity Liabilities Accounts Payable 287,200 55.38% Notes Payable 59,800 11.53% Long-term liability 11,800 2.28% Total Liabilities 358,800 69.19% Equity Paid-in Capital 27,500 5.30% Retained Earnings 132,300 25.51% Total Equity 159,800 30.81% Total Liabilities and Owner’s Equity 518,600 100% Value City Balance Sheet December 31,2009
Value CityIncomeStatementFor the year ended December 31,20092009Percentage100%Sales revenue810,000Cost of sale65.43%(530,000)Gross profit280,00018.52%150,000Salariesexpense3.70%30,000Rent expense6.17%50,000Financialexpense50,000Profitbeforetax1.79%14,500Incometaxexpense4.38%35,500Profit after Tax14
14 Value City Income Statement For the year ended December 31,2009 2009 Percentage Sales revenue 810,000 100% Cost of sale (530,000) 65.43% Gross profit 280,000 Salaries expense 150,000 18.52% Rent expense 30,000 3.70% Financial expense 50,000 6.17% Profit before tax 50,000 Income tax expense 14,500 1.79% Profit after Tax 35,500 4.38%
II. Ratio AnalysisRatio analysis is used widely. It is a criticaltool used by the management to see whatexactly is happening in the company and iswatched closely by all information users.A ratio is the mathematical relationshipbetween two quantities in the form of afraction or percentage.15
15 Ⅲ. Ratio Analysis ⚫ Ratio analysis is used widely. It is a critical tool used by the management to see what exactly is happening in the company and is watched closely by all information users. ⚫ A ratio is the mathematical relationship between two quantities in the form of a fraction or percentage