Question

Using these data from the comparative balance sheet of Ramirez 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 or (Decrease)
Dec. 31, 2014 Dec. 31, 2013 Amount Percentage
Accounts receivable $ 460,000 $ 400,000
Inventory $ 780,000 $ 650,000
Total assets $3,164,000 $2,800,000

Answer 1

Answer:

                                                                       Increase/(Decrease)

                                  31/12/2014  31/12/2013 Amount  Percentage

Accounts receivable $460,000  $400,000   $60,000       15%

Inventory                    $780,000  $650,000   $130,000      20%

Total assets             $3,164,000  $2,800,000 $364,000      13%

*A/R to Total Assets          14.54%               14.29%

Inventory to Total Asset    24.65%              23.21%

(*A/R = Account Receivable)

Explanation:

Horizontal Analysis measure the change in the values and percentage from one year to other. whereas the vertical analysis compares the current years values. It measure the ratio or percentage of an item to another in the same year data.

Working

2014

Account Receivable to total asset = (460,000 / 3,164,000) x 100 = 14.54%

Inventory to total asset = (780,000 / 3,164,000) x 100 = 24.65%

2013

Account Receivable to total asset = (400,000 / 2,800,000) x 100 = 14.29%

Inventory to total asset = (650,000 / 2,800,000) x 100 = 23.21%