Question

The following comparative current asset information has been extracted from a balance sheet for two successive years. Complete a horizontal analysis for years 0007 too 0008 and a vertical common-sized analysis for year 0008. show the increase (+) or decrease (-) in dollars and the percentage of changes in the horizontal analysis

current assets	year 0007	year 0008
cash	$10,000	$12,000
credit card	1,000	1,500
accounts receivable	800	880
food inventory	11,200	7,840
prepaid expenses	3,300	4,620
total current assets	$26,300	26,840

Answer 1

Here is the horizontal analysis

Current Assets	Year 0007	Year 0008	Variance	% of Change
Cash	$ 10,000	$ 12,000	$    2,000	20%
Credit Card	$    1,000	$    1,500	$       500	50%
Accounts Receivable	$       800	$       880	$         80	10%
Food Inventory	$ 11,200	$    7,840	$ -3,360	-30%
Prepaid Expenses	$    3,300	$    4,620	$    1,320	40%
Total Current Assets	$ 26,300	$ 26,840	$       540	2%

Here is the vertical analysis (shown as percentage of total current assets)

Current Assets	Year 0007		Year 0008
Cash	$ 10,000	38%	$ 12,000	45%
Credit Card	$    1,000	4%	$    1,500	6%
Accounts Receivable	$       800	3%	$       880	3%
Food Inventory	$ 11,200	43%	$    7,840	29%
Prepaid Expenses	$    3,300	13%	$    4,620	17%
Total Current Assets	$ 26,300	100%	$ 26,840	100%