Question

Schellhammer Corporation reported the following amounts in 2016, 2017, and 2018. 2016 2017 2018 Current assets...

Schellhammer Corporation reported the following amounts in 2016, 2017, and 2018.

2016

2017

2018

Current assets $200,000 $210,000 $240,000
Current liabilities 150,000 168,000 184,000
Total assets 500,000 600,000 620,000


(b)

Perform each of the three types of analysis on Schellhammer’s current assets. (Round percentages to 0 decimal places, e.g. 43% and ratios to 2 decimal places, e.g.1.58. Use Illustration 14-3 formula for Horizontal Analysis.)

2016

2017

2018

Horizontal Analysis
Current assets % % %
Vertical Analysis
Current assets % % %
Ratio Analysis
Current ratio : 1 : 1 : 1

Homework Answers

Answer #1

Solution

2016 2017 2018
Horizontal analysis
Current assets 100% 105% 120%
Vertical analysis
Current assets 40% 35% 39%
Ratio analysis
Current ratio          1.33 : 1      1.25 : 1       1.30 : 1

Working

2016 2017 2018
Horizontal analysis
Current assets =200000/200000 =210000/200000 =240000/200000
Vertical analysis
Current assets =200000/500000 =210000/600000 =240000/620000
Ratio analysis
Current ratio =200000/150000 =210000/168000 =240000/184000
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