Vertical Analysis of a Balance Sheet
A condensed balance sheet for Simultech Corporation and a partially completed vertical analysis
are presented below.
SIMULTECH CORPORATION Balance Sheet (summarized) January 31, 2010 (in millions of U.S. dollars) | |||||
Cash and Short-Term Investments | $ 433 | 29% | Current Liabilities | $ 409 | 27% |
Accounts Receivable | 294 | 19 | Long-Term Liabilities | 495 | 33 |
Inventories | 206 | 14 | Total Liabilities | 904 | (b) |
Other Current Assets | 109 | (a) | Contributed Capital | 118 | (c) |
Property and Equipment | 27 | 2 | Retained Earnings | 492 | 32 |
Other Assets | 445 | 29 | Total Stockholders’ Equity | 610 | (d) |
Total Assets | $1,514 | 100% | Total Liabilities & |
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| Stockholders’ Equity | $1,514 | 100% |
Required:
1.Complete the vertical analyses by computing each line item (a)–(d) as a percentage of total assets. Round to the nearest whole percentage.
2.What percentages of Simultech’s assets relate to inventories versus property and equipment? What does this tell you about the relative significance of these two assets to Simultech’s business?
3.What percentage of Simultech’s assets is financed by total stockholder’s equity? By total liabilities?
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