Question

Reliable Moving Company reported the following amounts on its balance sheet as of December​ 31, 2019 and December​ 31, 2018: 2019 2018 Cash and Receivables $ 165 comma 000 $ 115 comma 000 Merchandise Inventory 195 comma 000 250 comma 000 ​Property, Plant and​ Equipment, net 760 comma 000 700 comma 000 Total Assets $ 1 comma 120 comma 000 $ 1 comma 065 comma 000 Total Liabilities $ 475 comma 000 $ 425 comma 000 For the vertical​ analysis, what is the percentage of total liabilities for December​ 31, 2018?​ (Round your answer to two decimal​ places.)

Answer 1

Total liabilities: 42.41%

Step-by-step explanation:

On a vertical analysis the balance sheet values are expressed as a percentage of total assets.

We will express the total liaiblities as a percentage of total assets.

`(liabilities)/(assets) * 100`

`(475,000)/(1,120,000) * 100 = 42,41`

The reasoning for this is kind of analysis is to compare the values as relatives rather than nominal values.