Final answer:
In vertical analysis, the common size percentage for total assets is calculated by dividing each individual asset by the total assets and expressing the result as a percentage.
Step-by-step explanation:
Vertical Analysis and Common Size Percentages
In vertical analysis, the common size percentage for total assets is calculated by dividing each individual asset by the total assets and expressing the result as a percentage. This allows for the comparison of the proportion of each asset to the total assets. In this case, the total assets would be the sum of reserves, bonds, and loans. For example, if reserves are 30, bonds are 50, and loans are 50, then the total assets would be 30 + 50 + 50 = 130. Therefore, the common size percentage for each asset would be:
- Reserves: (30/130) x 100 = 23.08%
- Bonds: (50/130) x 100 = 38.46%
- Loans: (50/130) x 100 = 38.46%