Question

Suppose the comparative balance sheets of Skysong, Inc. are presented here. SKYSONG, INC. Condensed Balance Sheet May 31 ($ in millions) 2017 2016 Assets Current Assets $9,550 $8,900 Property, plant, and equipment (net) 2,050 1,850 Other assets 1,480 1,730 Total assets $13,080 $12,480 Liabilities and Stockholders' Equity Current Liabilities $3,230 $3,330 Long-term liabilities 1,270 1,300 Stockholders’ equity 8,580 7,850 Total liabilities and stockholders' equity $13,080 $12,480 (a) Prepare a horizontal analysis of the balance sheet data for Skysong, using 2016 as a base. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000), (20%). Round percentages to 1 decimal place, e.g. 12.1%.) SKYSONG, INC. Condensed Balance Sheet May 31 ($ in millions) 2017 2016 Increase (Decrease) Percentage Change from 2016 Assets Current Assets $9,550 $8,900 $ % Property, plant, and equipment (net) 2,050 1,850 % Other assets 1,480 1,730 % Total assets $13,080 $12,480 $ % Liabilities and Stockholders' Equity Current Liabilities $3,230 $3,330 $ % Long-term liabilities 1,270 1,300 % Stockholders’ equity 8,580 7,850 % Total liabilities and stockholders' equity $13,080 $12,480 $ % (b) Prepare a vertical analysis of the balance sheet data for Skysong for 2017. SKYSONG, INC. Condensed Balance Sheet $ (in millions) Percent Assets Current Assets $9,550 % Property, plant, and equipment (net) 2,050 % Other assets 1,480 % Total assets $13,080 % Liabilities and Stockholders' Equity Current Liabilities $3,230 % Long-term Liabilities 1,270 % Stockholders’ equity 8,580 % Total liabilities and stockholders' equity $13,080 %

Answer 1

A)Horizontal analysis:

	2017	2016	Increase/(decrease) = [2017-2016]	% [increase or decrease /figure of 2016]
Asset
Current asset	9,550	8,900	650	7.30%   [650*100/8900]
property plant	2,050	1,850	200	10.81%     [200*100/1850]
other asset	1,480	1,730	-250	-14.45 % (-250*100/1730)
Total asset	13,080	12,480	600	4.80% (600*100/12480)
Liability
current liability	3,230	3,330	-100	-3.00%(-100*100/3330
long term liability	1,270	1,300	-30	-2.30%(-30*100/1300)
share holders equity	8,580	7,850	730	9.29(730*100/7850)
Total liabilities and equity	13,080	12,480	600	4.81%(600*100/12480)

2)Vertical analysis:

	2017	%	2016		%
Asset
current asset	9,550	73 [9550/13080]	8,900		71   [8839/12480]
Property plant	2,050	15.7 [2,050/13080]	1,850		14.8[1,850/12,480]
other asset	1,480	11.3    [1,480/13080]	1,730		13.9 [1,730/12,480]
Total asset	13,080	100	12,480		100
Liabilities and shareholders equity
current liability	3,230	24.7 [3230/13,080]	3,330		26.7     [3330/12480]
Long term liability Total liability	1,270	9.7    [1270/13080]	1,300		10.4   [1300/12480]
Total liability	4500	34.4   [4500/13080]	4630		37.1    [4630/12480]
shareholders equity	8,580	65.6    [8580/13080]	7,850		62.9    [7850/12480]
Total liabilities and shareholders equity	13,080	100	12,480		100