Question

Brief Exercise 13-04 Using these data from the comparative balance sheet of Crane 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, 2020 Dec. 31, 2019 Amount Percentage Accounts receivable $445,200 $371,000 % $ Inventory 692,500 554,000 $ Total assets 3,313,440 2,808,000 % $

Answer 1

The Total assets of the company increased and inventory & account receivable also shows an hike in the year.

Horizontal Analysis performes the comparison from the past year ie change in values from one year to the another year. Increase or (Decrease) Dec. 31, 2019 Amount Percentage Dec. 31, 2020 Formula : Amount Formula : Percentage Account receivable $ 445,200.00 $ 371,000.00 $ 74,200.00 20% = 445200 - 371000 = 74200/371000 * 100 Inventory $ 692,500.00 $ 554,000.00 $ 138,500.00 25% = 692500 - 554000 = 138500/554000 * 100 Total Assets $ 3,313,440.00 $2,808,000.00 $ 505,440.00 18% = 3313440 - 2808000 = 505440/2808000 * 100

Calculaton of Ratios - Dec. 31, 2020 Dec. 31, 2019 Account Receivable to Total Asset: Account receivable Total Assets Account receivable Total Assets $ $ 445,200.00 3,313,440.00 $ $ 371,000.00 2,808,000.00 13.4% 13.2% Inventory to Total Assets = Inventory Total Assets Inventory Total Assets $ $ 692,500.00 3,313,440.00 $ $ 554,000.00 2,808,000.00 20.9% 19.7%

In the calculation of the Accounts Receivable to total assets ratio and Inventory to Total assets the ratios are not rounded off as the comparison won't be possible as there is a very minor difference in the ratios.