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Vertical and Horizontal Analysis Activity

The document discusses horizontal and vertical analysis of balance sheets and income statements. Horizontal analysis compares line items from two periods to analyze changes over time in amounts and percentages. Vertical analysis expresses each line item as a percentage of a total to analyze the composition and internal structure of financial statements. The document provides examples of condensed balance sheets and income statements from ABC Corporation for the years 2019 and 2020 and calculates horizontal and vertical analyses.

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Kenneth Fulguerinas
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5K views3 pages

Vertical and Horizontal Analysis Activity

The document discusses horizontal and vertical analysis of balance sheets and income statements. Horizontal analysis compares line items from two periods to analyze changes over time in amounts and percentages. Vertical analysis expresses each line item as a percentage of a total to analyze the composition and internal structure of financial statements. The document provides examples of condensed balance sheets and income statements from ABC Corporation for the years 2019 and 2020 and calculates horizontal and vertical analyses.

Uploaded by

Kenneth Fulguerinas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
  • Horizontal Analysis of Financial Statements: Analyzes balance sheets and income statements for variance in assets, liabilities, and other entries over multiple years.
  • Vertical Analysis of Financial Statements: Assesses the proportional breakdown of financial statement entries, offering insights into each item's impact on total figures.

VERTICAL AND HORIZONTAL ANALYSIS ACTIVITY

HORIZONTAL ANALYSIS OF A BALANCE SHEET

ABC Corporation
Condensed Balance Sheet
December 31

Assets 2019 2020 Amount Percentage Change


Current Assets Php. 74000 Php. 80,000 6,000 8.11%
Property, plant & Equipment (net) 99,000 90,000 (9,000) -9.09%
Intangibles 27,000 40,000 13,000 48.15%
Total Assets Php. 200,000 Php. 210,000 10,000 5%

Liabilities and Stockholder's equity


Current Liabilities Php. 42,000 Php. 48,000 6,000 14.29%
Long-term Liabilities 143,000 150,000 7,000 4.90%
Stockholder's equity 15,000 12,000 (3,000) -20%
Total Liabilities and Equity Php. 200,000 Php. 210,000 10,000 5%

HORIZONTAL ANALYSIS OF AN INCOME STATEMENT

ABC Corporation
Condensed Income Statements
For the Years Ended December 31

2019 2020 Amount Percentage Change


Net Sales Php. 600,000 Php. 500,000 (100,000) -16.67%
Cost of Goods Sold 483,000 420,000 (63,000) -13.04%
Gross Profit 117,000 80,000 (37,000) 31.62%
Operating Expenses 57,200 44,000 (13,200) -23.08%
Net Income Php. 59,800 Php. 36,000 (23,800) -39.80%
VERTICAL ANALYSIS OF A BALANCE SHEET

ABC Corporation
Condensed Balance Sheet
December 31, 2020

   
  Amount Percent
Assets  
Current Assets Php. 74,000  37%
Property, Plant & Equipment (net) 99,000  49.5%
Intangibles 27,000  13.5%
Total Assets Php. 200,000  100%
Liabilities & Stockholder's Equity  
Current Liabilities Php. 42,000  21%
Long-Term Liabilities 143,000  71.5%
Stockholder's Equity 15,000  7.5%
Total Liabilities & Stockholder's Equity Php. 200,000  100%
     

VERTICAL ANALYSIS OF AN INCOME STATEMENT

ABC Corporation
Condensed Income Statements
For the Years Ended December 31

 
  2019 2020
  Amount Percent Amount Percent
Net Sales Php. 600,000  100% Php. 500,000  100%
Cost of Goods Sold 483,000  80.5% 420,000  84%
Gross Profit 117,000  19.5% 80,000  16%
Operating Expenses 57,200  9.53% 44,000  8.8%
Net Income Php. 59,800  9.97% Php. 36000  7.2%
         

VERTICAL AND HORIZONTAL ANALYSIS ACTIVITY HORIZONTAL ANALYSIS OF A BALANCE SHEET ABC Corporation Condensed Balance Sheet Dece
VERTICAL ANALYSIS OF A BALANCE SHEET ABC Corporation Condensed Balance Sheet December 31, 2020       Amount Percent Assets  
         

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