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Acc 280 Week 7 Checkpoint Ratio, Vertical, and Horizontal Analysis Check Point

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Acc 280 Week 7 Checkpoint Ratio, Vertical, and Horizontal
Analysis Check Point
Principles of Accounting
Ratio, Vertical, and Horizontal Analysis Check Point
The three vital tools of financial statements are the ratio, vertical, and
horizontal analysis. Each financial statement examines the data within
monetary statements of businesses or organizations. Being able to
determine the financial stability of a company is important in addressing
any areas of weakness or aide in the decision making processes.
Ratio analysis is associated with evaluating the liquidity, profitability, and
solvency of a corporation to judge performance scenarios. Vertical
analysis gauges entries for assets, liabilities, and equities in a balance
sheet to compare the proportions of the total account. It enables any
size of a business the opportunity to easily compare relative annual
changes. Horizontal analysis allows companies to compare performance
ratios over a certain period of time, usually one year’s worth of entries. It
is also referred to as trend analysis and offers insight into the overall
success of a company in order to make sound investments. These types
of ratios are able to be used on any item of finance from revenues to
earnings within a company.
PepsiCo, Inc.
The Current Ratio for 2005 is Current Assets 10,454/ Current Liabilities
9,406 which equals 1.11%.
The Current Ratio for 2004 is Current Assets 8,639/ Current Liabilities
6,752 which equals 1.28%.
Two measures of vertical analysis are:
Vertical Analysis of 2005- Total Current Assets at 10,454 divided by Total
Assets at 31, 727 equals 33%.

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