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...
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.