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Chapter 23 LACAL Co. Horizontal vs vertical analysis




Chapter 23 LACAL Co. Horizontal vs vertical analysis;In part (1), the vertical analysis of the LACAL company's Balance Sheet shows that the level of current asset as percentage of total assets increased in 2013 than that of 2012 to 70.9% from 62.7%, whereas the level of current liabilities as percent of total assets (total liabilities &stockholders? equity) decreased in 2013 than that of 2012 to 7.1% from18.5%. So, the level of working capital as percentage of total assets for the company increased and hence the liquidity of the company also increased in the year 2013. On the other hand, the level of retained earnings as well as the level of shareholders equity as percentage of total assets increased in 2013, so the company performed better in 2013 than 2012. Both the vertical and horizontal analysis reveals that, the level of long-term debt decreased significantly in 2013 from 2012 by 37.7%, also as percentage of total asset. Total assets increased by 20% in 2013 than that of the previous year and equity increased by 46.2%.;The vertical analysis of Income Statement for the LACAL Company, for the year 2013 and 2012, shows that almost all the items remained the same as percentage of total sales during the year 2013 and 2012. In horizontal analysis it is shown that the sales of the year 2013 increased by almost 18.3% from that of the year 2012, but the Sales Return and Allowances increased by 66.7% in the year 2013 than 2012, which is the greatest and a massive percentage change in this category of expense. So, managers should concentrate more on the selling efficiency of executives with that responsibility and also the quality of their product or services should be maintained very efficiently.


Paper#78314 | Written in 18-Jul-2015

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