Homework Week 8:
1.
Required:
a. Prepare a vertical analysis of the balance sheet data for 2022 and 2021. Express each amount
as a percentage of total assets. (Amounts to be deducted should be indicated by a minus sign.
Round your answers to 1 decimal place.)
Year 2021
Cash = Year 2021 $800,000/ total assets $13,700,000 = 5.8%
Accounts receivable = Year 2021 $1,200,000 / total assets $13,700,000 = 8.8%
Inventory = Year 2021 $1,700,000 / total assets $13,700,000 = 12.4%
Buildings = Year 2021 $11,000,000 / total assets $13,700,000 = 80.3%
Accumulated depreciation = Year 2021 $1,000,000 / total assets $13,700,000 = (7.3%)
Accounts payable = Year 2021 $1,700,000 / total assets $13,700,000 = 12.4%
Contingent liability = Year 2021 $0 / total assets $13,700,000 = 0%
Common stock = Year 2021 $8,000,000 / total assets $13,700,000 = 58.4%
Retained earnings = Year 2021 $4,000,000 / total assets $13,700,000 = 29.2%
Year 2022
, Cash = Year 2022 $2,300,000 / total assets $15,600,000 = 14.7%
Accounts receivable = Year 2021 $1,500,000 / total assets $15,600,000 = 9.6%
Inventory = Year 2021 $2,800,000 / total assets $15,600,000 = 17.9%
Buildings = Year 2021 $11,000,000 / total assets $15,600,000 = 70.5%
Accumulated depreciation = Year 2021 $2,000,000 / total assets $15,600,000 = (12.8%)
Accounts payable = Year 2021 $1,450,000 / total assets $15,600,000 = 9.3%
Contingent liability = Year 2021 $1,500,000 / total assets $15,600,000 = 9.6%
Common stock = Year 2021 $8,000,000 / total assets $15,600,000 = 51.3%
Retained earnings = Year 2021 $4,650,000 / total assets $15,600,000 = 29.8%
2.
b. Prepare a horizontal analysis for 2022 using 2021 as the base year. (Note: If the percentage
increase or decrease cannot be calculated, then leave the cell blank. Decreases should be
indicated by a minus sign. Round your percentage answers to 1 decimal place.)
Cash $2,300,000 - $800,000 = $1,500,000 / $800,000 = 187.5%
Accounts receivable $1,500,000 - $1,200,000 = $300,000 / $1,200,000 = 25%
Inventory $2,800,000 - $1,700,000 = $1,100,000 / $1,700,000 = 64.7%
Buildings $11,000,000 - $11,000,000 = $0 / $11,000,000 = 0%
Accumulated depreciation ($2,000,000) – ($1,000,000) = ($1,000,000) / ($1,000,000) = 100%
, Total assets $15,600,000 - $13,700,000 = $1,900,000 / $13,700,000 = 13.9
Accounts payable $1,450,000 - $1,700,000 = ($250,000) / $1,700,000 = (14.7%)
Contingent liability $1,500,000 – 0 = $1,500, = 0%
Common Stock $8,000,000 - $8,000,000 = 0 / $8,000,000 = 0%
Retained earnings $4,650,000 - $4,000,000 = $650,000 / $4,000,000 = 16.3%
Total liabilities and stockholders’ equity $15,600,000 - $13,700,000 = $1,900,000 / $13,700,000
= 13.9%
3.
Required:
a. Calculate the four risk ratios listed above for Adrian Express in 2021. (Use 365 days in a year.
Round your answers to 1 decimal place.)
Receivables turnover ratio = Sales / (Past Year Accounts Receivable + Current Year Accounts
Receivable) / 2
= $13,206,000 / (910,000 + 1,220,000) / 2
= $13,206,000 / $1,065,000
= 12.4 times
1.
Required:
a. Prepare a vertical analysis of the balance sheet data for 2022 and 2021. Express each amount
as a percentage of total assets. (Amounts to be deducted should be indicated by a minus sign.
Round your answers to 1 decimal place.)
Year 2021
Cash = Year 2021 $800,000/ total assets $13,700,000 = 5.8%
Accounts receivable = Year 2021 $1,200,000 / total assets $13,700,000 = 8.8%
Inventory = Year 2021 $1,700,000 / total assets $13,700,000 = 12.4%
Buildings = Year 2021 $11,000,000 / total assets $13,700,000 = 80.3%
Accumulated depreciation = Year 2021 $1,000,000 / total assets $13,700,000 = (7.3%)
Accounts payable = Year 2021 $1,700,000 / total assets $13,700,000 = 12.4%
Contingent liability = Year 2021 $0 / total assets $13,700,000 = 0%
Common stock = Year 2021 $8,000,000 / total assets $13,700,000 = 58.4%
Retained earnings = Year 2021 $4,000,000 / total assets $13,700,000 = 29.2%
Year 2022
, Cash = Year 2022 $2,300,000 / total assets $15,600,000 = 14.7%
Accounts receivable = Year 2021 $1,500,000 / total assets $15,600,000 = 9.6%
Inventory = Year 2021 $2,800,000 / total assets $15,600,000 = 17.9%
Buildings = Year 2021 $11,000,000 / total assets $15,600,000 = 70.5%
Accumulated depreciation = Year 2021 $2,000,000 / total assets $15,600,000 = (12.8%)
Accounts payable = Year 2021 $1,450,000 / total assets $15,600,000 = 9.3%
Contingent liability = Year 2021 $1,500,000 / total assets $15,600,000 = 9.6%
Common stock = Year 2021 $8,000,000 / total assets $15,600,000 = 51.3%
Retained earnings = Year 2021 $4,650,000 / total assets $15,600,000 = 29.8%
2.
b. Prepare a horizontal analysis for 2022 using 2021 as the base year. (Note: If the percentage
increase or decrease cannot be calculated, then leave the cell blank. Decreases should be
indicated by a minus sign. Round your percentage answers to 1 decimal place.)
Cash $2,300,000 - $800,000 = $1,500,000 / $800,000 = 187.5%
Accounts receivable $1,500,000 - $1,200,000 = $300,000 / $1,200,000 = 25%
Inventory $2,800,000 - $1,700,000 = $1,100,000 / $1,700,000 = 64.7%
Buildings $11,000,000 - $11,000,000 = $0 / $11,000,000 = 0%
Accumulated depreciation ($2,000,000) – ($1,000,000) = ($1,000,000) / ($1,000,000) = 100%
, Total assets $15,600,000 - $13,700,000 = $1,900,000 / $13,700,000 = 13.9
Accounts payable $1,450,000 - $1,700,000 = ($250,000) / $1,700,000 = (14.7%)
Contingent liability $1,500,000 – 0 = $1,500, = 0%
Common Stock $8,000,000 - $8,000,000 = 0 / $8,000,000 = 0%
Retained earnings $4,650,000 - $4,000,000 = $650,000 / $4,000,000 = 16.3%
Total liabilities and stockholders’ equity $15,600,000 - $13,700,000 = $1,900,000 / $13,700,000
= 13.9%
3.
Required:
a. Calculate the four risk ratios listed above for Adrian Express in 2021. (Use 365 days in a year.
Round your answers to 1 decimal place.)
Receivables turnover ratio = Sales / (Past Year Accounts Receivable + Current Year Accounts
Receivable) / 2
= $13,206,000 / (910,000 + 1,220,000) / 2
= $13,206,000 / $1,065,000
= 12.4 times
