Question

Argentina Moving Company reported the following amounts on its balance sheet as of December 31, 2016 and December 31, 2017: Cash and Receivables Merchandise Inventory Property, Plant and Equipment, net Total Assets Total Liabilities 2017 $75,000 145,000 830,000 $1,050,000 $535,000 2016 $95,000 250,000 790,000 $1,135,000 $375,000 For the vertical analysis, what is the percentage of stockholders' equity as of December 31, 2017? (Round your answer to two decimal places.) O A. 100% OB. 49.05% O C. 66.96% OD. There is not enough information provided to make this computation.

Answer 1

Answer: (B) 49.05%

Explanation: As we know that Total Assets = Total Liabilities and Stockholder's Equity. So 31st December, 2017 Total Assets are $1,050,000 and Liabilities are $ 535,000.

Now we can calculate Stockholder's Equity as on 31st December, 2017

Total Assets = Total Liabilities + Stockholder's Equity

$1,050,000 = $535,000 + Stockholder's Equity

Stockholder's Equity = 1,050,000- 535,000

Stockholder's Equity = $515,000

Now we can calculate percentage of Stockholder's Equity

= Stockholder's Equity / Total Liabilities and Stockholder's Equity

= ($515,000 / $ 1,050,000) × 100

= 49.047 or say

= 49.05%

So the B option is correct.