Question

Using these data from the comparative balance sheet of Ramirez Company, perform horizontal analysis. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000), (20%). Round percentages to 0 decimal places, e.g. 12%.)

Increase or (Decrease)
Dec. 31, 2014 Dec. 31, 2013 Amount Percentage
Accounts receivable $ 460,000 $ 400,000
Inventory $ 780,000 $ 650,000
Total assets $3,164,000 $2,800,000

Answer 1

Increase/(Decrease)

31/12/2014 31/12/2013 Amount Percentage

Accounts receivable $460,000 $400,000 $60,000 15%

Inventory $780,000 $650,000 $130,000 20%

Total assets $3,164,000 $2,800,000 $364,000 13%

*A/R to Total Assets 14.54% 14.29%

Inventory to Total Asset 24.65% 23.21%

(*A/R = Account Receivable)

Step-by-step explanation:

Horizontal Analysis measure the change in the values and percentage from one year to other. whereas the vertical analysis compares the current years values. It measure the ratio or percentage of an item to another in the same year data.

Working

2014

Account Receivable to total asset = (460,000 / 3,164,000) x 100 = 14.54%

Inventory to total asset = (780,000 / 3,164,000) x 100 = 24.65%

2013

Account Receivable to total asset = (400,000 / 2,800,000) x 100 = 14.29%

Inventory to total asset = (650,000 / 2,800,000) x 100 = 23.21%