Description
ANALYSIS
Ratio analysisexpresses the
relationship among selected items of financial statement data. A ratioexpresses the mathematical relationship
between one quantity and another. For analysis of the primary financial
statements, we classify ratios as follows.

A single ratio by itself is not very meaningful.
Accordingly, in this and the following chapters, we will use various
comparisons to shed light on company performance:
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Question 1 
Using these data from
the comparative balance sheet of Rosalez 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 

Dec. 
Dec. 
Amount 
Percentage 

Accounts receivable 
$ 545,500 
$ 393,400 
$ 
% 

Inventory 
$ 820,400 
$ 604,600 
$ 
% 

Total assets 
$3,146,500 
$2,742,100 
$ 
% 
Question 2 
Using these data from
the comparative balance sheet of Rosalez Company, perform vertical analysis.(Round percentages to 1
decimal place, e.g. 12.5%.)
Dec. 
Dec. 

Amount 
Percentage 
Amount 
Percentage 

Accounts receivable 
$ 543,900 
% 
$ 417,700 
% 

Inventory 
$ 821,700 
% 
$ 617,000 
% 

Total assets 
$3,175,700 
% 
$2,787,300 
% 
Question 3 
Vertical analysis
(commonsize) percentages for Vallejo Companyâ€™s sales, cost of goods sold, and
expenses are listed here.
Vertical 
2012 
2011 
2010 

Sales 
100 
% 
100 
% 
100 
% 

Cost of goods sold 
60.8 
63.8 
66.4 

Expenses 
24.7 
27.8 
28.8 
Did Vallejoâ€™s net income as a percent of sales increase, decrease, or remain
unchanged over the 3year period? Provide numerical support for your answer.