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Horizontal, Vertical, Ratio Checkpoint Essay

376 words - 2 pages

ointThe three tools of financial statement analysis and functions are the horizontal, vertical, and ratio analysis. The horizontal ratio also called the trend ratio, evaluates financial statements and data over a certain period of time. It is mainly used in intra- company comparisons. The purpose of this is to determine the decrease or increase that took place. The vertical analysis also called the common- size analysis, evaluates the financial statement data by expressing each item as a base amount or a percentage in the ...view middle of the document...

28%
For 2005 it’s the same scenario divide the current assets \$10454 by \$9406, (total liabilities) equal to 1.11%
The two measures of vertical analysis is current assets or \$10,454
\$31,727 = 33% (Divide the two to get this amount.)
The two measures of horizontal analyses are current assets in 2005- \$10,454 Divided by Current assets in 2004- \$8,639 = 121% or a 21% increase from 2004 to 2005.
Current liabilities in 2005 are \$9,406. Divide that by current liabilities in 2004 or \$6752 which equals 139% or 39% increase from 04 to 05.
For the Coca-Cola Co, to get the current ratio you divide the current assets by the current liabilities. For 2004 \$12,281 divided by \$11,133 is equal to 1.10%
For 2005 you divide (Current Assets) \$10,250 by (Current Liabilities) 9,836 to get 1.04%
Two measures of vertical analysis is (Current Assets) \$10,250 divided by (Total Assets) \$29,427 which is equal to 34.8%
The two measures of horizontal analysis is (Current Assets- 05) \$10,250 divided by (Current Assets- 04) \$12,281 which equals 83.5% or a 16.5% decrease from 2004 to 2005.
Current liabilities in 2005 are \$9,836 divide this by current liabilities in 2004 of \$11,133 to get 88.4% or a decrease of 11.6% from 2004 to 2005.

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