Question

Vertical Analysis of Balance Sheet

Balance sheet data for Alvarez Company on December 31, the end of two recent fiscal years, follows:

	Current Year		Previous Year
Current assets	$339,140		$197,040
Property, plant, and equipment	623,580		558,280
Intangible assets	131,280		65,680
Current liabilities	251,620		147,780
Long-term liabilities	404,780		295,560
Common stock	98,460		106,730
Retained earnings	339,140		270,930

Prepare a comparative balance sheet for both years, stating each asset as a percent of total assets and each liability and stockholders' equity item as a percent of the total liabilities and stockholders' equity. If required, round percentages to one decimal place.

Alvaraz Company
Comparative Balance Sheet
For the Years Ended December 31
	Current year Amount	Current year Percent	Previous year Amount	Previous year Percent
Current assets	$339,140	%	$197,040	%
Property, plant, and equipment	623,580	%	558,280	%
Intangible assets	131,280	%	65,680	%
Total assets	$1,094,000	%	$821,000	%
Current liabilities	$251,620	%	$147,780	%
Long-term liabilities	404,780	%	295,560	%
Common stock	98,460	%	106,730	%
Retained earnings	339,140	%	270,930	%
Total liabilities and stockholders' equity	$1,094,000	%	$821,000	%

Answer 1

Alvaraz Company
Comparative Balance Sheet
For the Years Ended December 31
	Current year Amount	Current year Percent	Previous year Amount	Previous year Percent
Current assets	$               339,140	$339,140/$1,094,000 = 31%	$                   197,040	$197,040/$821,000 = 24%
Property, plant, and equipment	$               623,580	$623,582/$1,094,000 = 57%	$                   558,280	$558,280/$821,000 = 68%
Intangible assets	$               131,280	$131,280/$1,094,000 = 12%	$                     65,680	$65,680/$821,000 = 8%
Total assets	$             1,094,000	100%	$                   821,000	100%
Current liabilities	$               251,620	$251,620/$1,094,000 = 23%	$                   147,780	$147,780/$821,000 = 18%
Long-term liabilities	$               404,780	$404,780/$1,094,000 = 37%	$                   295,560	$295,560/$821,000 = 36%
Common stock	$                 98,460	$98,460/$1,094,000 = 9%	$                   106,730	$106,730/$821,000 = 13%
Retained earnings	$               339,140	$339,140/$1,094,000 = 31%	$                   270,930	$270,930/$821,000 = 33%
Total liabilities and stockholders' equity	$             1,094,000	100%	$                   821,000	100%

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