Preview

Xacc/280 Final

Good Essays
Open Document
Open Document
632 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Xacc/280 Final
Ratio, Vertical, and Horizontal Analyses
Regina Stewart
XACC/280
February 3, 2012
Jose Rodriguez

Ratio, Vertical, and Horizontal Analyses
A detailed examination of the tools used in financial analysis, in addition to their various functions, is provided within this paper. The current ratio and calculations on the questions are provided herein.
A variety of tools are used to assess the importance of financial data. Frequently used tools of financial statement analysis consist of horizontal analysis, vertical analysis and ratio analysis. These techniques assist in the evaluation of financial statements providing information regarding the financial condition of a business.
Evaluating the data of financial statements over a period of time, …show more content…
Pepsico horizontal analysis
2005 Total Current assets2004 Total Current assets×100 104548639×100=121.01%
2005 Total Current liabilites2004 Total Current liabilities×100 94066752×100=139.31%

Analysis
Current assets and current liability increased in 2005 in comparison to 2004, but, the current liability increased at a higher rate which caused a reduction in the gross profit.
Current ratio computation for Coca-Cola Company
Coca-Cola Company current ratio for 2005
Current ratio=Current assetsCurrent liabilities Current ratio=102509836=1.04
Coca-Cola Company current ratio for 2004
Current ratio=Current assetsCurrent liabilities Current ratio=1228111133=1.1
Analysis
Low current ratios values imply that a company could have trouble meeting current obligation but a very high current ratio could imply that the company is not managing its resources well.
Two measures of vertical analysis of Coca-Cola Company
Coca-Cola company vertical analysis for the year
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Good Essays

    Xacc 280 Pepsico vs Coca-Cola
    • 746 Words
    • 3 Pages

    Xacc 280 Pepsico vs Coca-Cola

    Three tools of evaluating financial statements that are used most often are Horizontal analysis, Vertical analysis, and Ratio analysis.…

    • 746 Words
    • 3 Pages
    Good Essays
    Read More
  • Better Essays

    Xacc 280 Final
    • 1225 Words
    • 5 Pages

    Xacc 280 Final

    An official financial analysis for a specific company needs two years of financial data from the company and from a competitor in the same industry. This financial analysis is between PepsiCo, Inc. and Coca-Cola. Pepsi and Coca-Cola dominate the beverage market worldwide. In addition to sodas, they also distribute a variety of water and energy drinks. Based on the analysis, the investor will be able to make a better investment choice.…

    • 1225 Words
    • 5 Pages
    Better Essays
    Read More
  • Satisfactory Essays

    Xacc 280 Week 7 Checkpoint
    • 292 Words
    • 2 Pages

    Xacc 280 Week 7 Checkpoint

    There are three ways to analyze financial statements there is the vertical analysis, which uses the base percentage to express the assets or liabilities and stockholders’ equity. Horizontal analysis or the trend analysis is how someone can evaluate the financial statement over a period. With this method, one can determine an increase or decrease in assets liabilities or stockholders equity. This can be done in percentage or totals Horizontal analysis is used primarily with an intercompany comparison. Ratio analysis is when one uses three comparisons to look at the financial statements it would look at industry average intracompany and intercompany. Ratio expresses the mathematical relationship in a percentage either a rate or a proportions. It depends on if you are a Short-term creditor or a stockholder which method will be most beneficial for the necessary information to make a sound decision. This information can be overwhelming so careful study and practice is important when analyzing finical statements.…

    • 292 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Xacc 280 Final
    • 2014 Words
    • 9 Pages

    Xacc 280 Final

    We will be comparing two companies; both are strong and have great credibility. Ideally with a solid competitor we want to show differentials and make a solid contrast. In this case we want to compare at least two years of financial data. A great way to exemplify this is to compare Coke to Pepsi. To say which one is better to drink is debatable, but what we are looking at is which is better to invest in. We will analyze the information provided in the appendixes and make a conscience decision as to which company is stronger, therefore a smarter investment choice. After all, I wouldn’t want you to throw your money down the drain.…

    • 2014 Words
    • 9 Pages
    Powerful Essays
    Read More
  • Good Essays

    Cango Financial
    • 1115 Words
    • 5 Pages

    Cango Financial

    The success of a business depends on its ability to remain profitable over the long term, while being able to pay all its financial obligations and earning above average returns for its shareholders. This is made possible if the business is able to maximize on available opportunities and very efficiently and effectively use the resources it has to create maximum value for all involved stakeholders. One way the performance of a company can be measured on critical areas such as profitability, its ability to stay solvent, the amount of debt exposure and the effectiveness in resource utilization, is performing financial analysis where a set of ratios provides a snapshot of company performance and future prospects. Financial analysis is also a very useful technique that forms a basis for making key decisions about company operations. In addition to internal company members, these ratios are used by potential investors and shareholders to make investment decisions about the company.…

    • 1115 Words
    • 5 Pages
    Good Essays
    Read More
  • Better Essays

    ACC 305 Week 5 Final Assignment
    • 2269 Words
    • 7 Pages

    ACC 305 Week 5 Final Assignment

    It is important for every internal and external stakeholder in a company to understand if a company is being profitable or not. A company that is failing or not growing can often come from poor financial planning and analysis. The difference between failure and success come from analyzing financial information. Analyzing financial information such as balance sheet, income statement and cash flow statement companies can predict and control their future. Financial statements are the primary documents used in reporting financial information to banks, investors, suppliers and others. Along with financial information, financial ratios can help stakeholders evaluate the business performance. They can deliver a better understanding of a variety of things going on in the company. Financial information and ratios are important tools to help predict the growth of a company and to compare them to other companies.…

    • 2269 Words
    • 7 Pages
    Better Essays
    Read More
  • Powerful Essays

    Final Financial Analysis
    • 1870 Words
    • 8 Pages

    Final Financial Analysis

    The three most common tools of financial analysis are the vertical analysis, the horizontal analysis, and the ration analysis (which will be discussed later). The vertical analysis evaluates financial statement data by expressing each item in a financial statement as a percentage of an original base amount (2010). The vertical analysis is also referred to as the common size analysis. The vertical analysis shows all data on a financial statement document in terms of a percentage. The vertical analysis will show how much assets, liabilities, or stockholders equity have gone up or declined from the year before. I am providing two examples of vertical analysis, one for PepsiCo. and one for Coca Cola to show which company has improved with assets and…

    • 1870 Words
    • 8 Pages
    Powerful Essays
    Read More
  • Good Essays

    Jack In The Box Financial Analysis
    • 676 Words
    • 3 Pages

    Jack In The Box Financial Analysis

    The current ratio is a measure of current assets to current liabilities. The current ratio fluctuates throughout the five year span; having the highest ratio at 1.19 in 2006 and 11.1 in 2008.…

    • 676 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    Accounting and Finance: Managerial Use and Analysis
    • 1667 Words
    • 7 Pages

    Accounting and Finance: Managerial Use and Analysis

    Financial Statement Analysis Project -- A Comparative Analysis of Kohl’s Corporation and J.C. Penney Co…

    • 1667 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Good Essays

    Boston Beer Company
    • 1128 Words
    • 5 Pages

    Boston Beer Company

    The current ratio is a test of short-term debt-paying ability. In 2005 the current ratio for the company was 3.1 and in 2006 it was 2.94. I believe that the decline in the ratio could be due to eliminating slow selling products and other stagnant current assets along with an improvement in the financial situation. Generally, a current ratio is suppose to be around 2 on average, but the adequacy of a current ratio depends a lot on the make-up of the assets. It seems like The Boston Beer Co. is on the right track…

    • 1128 Words
    • 5 Pages
    Good Essays
    Read More
  • Powerful Essays

    Starbucks Financial Preformance
    • 1566 Words
    • 7 Pages

    Starbucks Financial Preformance

    We evaluated the financial performance of Starbucks by computing various ratios based on the company’s most current audited financial statements. Specifically, we evaluated the firm’s liquidity, operating profitability, capital structure, and market value. Additionally, we identified Starbucks’ competitors and benchmarked the company’s performance against the peer group. Finally, we defined what we believe the key factors are causing the current condition. Our assessment and results are presented below.…

    • 1566 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Good Essays

    Health Care and Financial Statement
    • 485 Words
    • 2 Pages

    Health Care and Financial Statement

    There are three types of financial statement analysis; for example, (1) Horizontal Analysis, (2) Vertical Analysis, and (3) Ratio Analysis. First, the horizontal analysis is also known as trend analysis, which views the behavior of an individual financial statement items over several accounting, which may be several quarters within the same fiscal year or several different years; however, the analysis of a given item may focus on absolute dollar amount, according to Edmonds, T.P., Olds, P.R., McNair, F.M., and Tsay. (2010). Moreover, “percentage analysis sidesteps the materiality problems of comparing different size companies by measuring changes in percentages rather than absolute amount; in other words, each change is converted to a percentage of the base year.”( Edmonds et al 2010, p. 326). Second, as Edmonds et al stated, vertical analysis of an income statement also known as a common size statement, involves converting each income statement component to a percentage of sales; however, vertical analysis suggest examining only one period, which is useful to compare common size income statements for several years; which also involves converting each balance sheet component to a percentage of total assets. Third, “ratio analysis involves the study of various relationships between different items reported in a set of financial statement; for example, net earnings reported on the income statement may be compared to total assets reported on the balance sheet; however, analysis calculate many different ratios for a wide variety of purposes.” (Edmonds, et al, 2010).…

    • 485 Words
    • 2 Pages
    Good Essays
    Read More
  • Powerful Essays

    Essentials of Financial Statement Analysis
    • 3390 Words
    • 14 Pages

    Essentials of Financial Statement Analysis

    Financial analysis tools: Commonsize statements, trend statements and financial ratios.  But they can be no better than the data from which they are constructed (i.e., the comparative financial statements).…

    • 3390 Words
    • 14 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Case Study Phoenix vs Petron
    • 5620 Words
    • 86 Pages

    Case Study Phoenix vs Petron

    The techniques used in the analysis include: common-sized financial statements, key financial ratios, trend analysis, structural analysis and industry comparison. The key financial ratios utilize are liquidity and solvency, profitability, leverage, and activity. Statement of cash flow is evaluated and integrated with the ratio analysis results.…

    • 5620 Words
    • 86 Pages
    Powerful Essays
    Read More
  • Good Essays

    Heritage Foods Case Study
    • 1708 Words
    • 7 Pages

    Heritage Foods Case Study

    Table showing current ratio of Heritage Foods (India) Limited during the period 2011-12 to 2015-16…

    • 1708 Words
    • 7 Pages
    Good Essays
    Read More

Related Topics