# Checkpoint ratio, vertical, and horizontal analyses

2. CheckPoint: Ratio, Vertical, and Horizontal Analyses

The calculations you perform for this CheckPoint form the basis of your analysis of your capstone project.

a? Write in 100 to 200 words an explanation of the three tools of financial statement analysis and the function of each.

a? Examine PepsiCo, Inc.as Consolidated Balance Sheet on p. A6 in Appendix A of Financial Accounting, especially its Current Assets, Current Liabilities, and Total Assets for years 2005 and 2004.

a? Calculate the following for PepsiCo, Inc. and show your work:

o The Current Ratio for 2005

o The Current Ratio for 2004

o Two measures of vertical analysisa for example, compute the current assets divided by total assets for each year, and express your result as a percentage

o Two measures of horizontal analysisa for example, compute the total change in assets by percentage, by dividing current assets in 2005 by current assets in 2004. Compute a similar percentage for current liabilities

a? Examine The Coca-Cola Companyas Consolidated Balance sheet on p. B2 in Appendix B of Financial Accounting, especially its Current Assets, Current Liabilities, and Total Assets for years 2005 and 2004.

a? Calculate the following for Coca-Cola and show your work:

o The Current Ratio for 2005

o The Current Ratio for 2004

o Two measures of vertical analysisa for example, compute the current assets divided by total assets for each year, and express your result as a percentage

o Two measures of horizontal analysisa for example, compute the total change in assets by percentage, by dividing current assets in 2005 by current assets in 2004. Compute a similar percentage for current liabilities

a? Post your explanation and calculations.

3. Exercise: Career Opportunities for Accountants

a? Post your response to the following items:

o Describe two business sectors you might want to work in if you were an accountant and explain why in 150 to 200 words.

o Research a specific company in one of the business sectors that interests you and describe how you imagine it might be to work there. Use 100 to 150 words for your description.