Question

If current assets on the balance sheet are $25,000, and current liabilities are $13,300, what percentage of total assets are current liabilities when applying vertical analysis?

Answer 1

To calculate the percentage of total assets that are current liabilities, divide current liabilities by total assets and multiply by 100.

Step-by-step explanation:

To calculate the percentage of total assets that are current liabilities, we need to find the total assets and total liabilities on the balance sheet. From the given information:

• Total assets = reserves ($30) + bonds ($50) + loans ($50) = $130
• Total liabilities = deposits ($300)

To find the percentage of total assets that are current liabilities, we divide current liabilities by total assets and multiply by 100:

Current liabilities as a percentage of total assets = (Current liabilities / Total assets) x 100

Current liabilities as a percentage of total assets = ($300 / $130) x 100 = 230.77%