FUNDAMENTAL OF ACCOUNTANCY, BUSINESS AND MANAGEMENT 2 (FABM2)

HVA PERFORMANCE TASK NO. 4

Horizontal and Vertical Analysis

NAME: SCORE:

Solve the following problems and show your solutions on a separate paper. Three (3) points
each (2 points for the solution and 1 point for the correct letter of your answer).

PROBLEM 1
HYZEL Trading presented the following selected items from its financial statements:

Cash and cash equivalents 500,000

Trading Securities 1,000,000
Inventory 2,500,000
Total current assets 5,000,000
Total Assets 15,000,000
Trade and Other Payables 800,000
Total Liabilities 6,000,000
Net Sales 8,000,000
Operating Expenses 2,200,000
Income Tax 960,000
Questions:
1. On a common-size statement of financial position, how would the company present the trading
securities?
a. 5.0% b. 6.7% c. 20.0% d. 25.6%

2. How would the company present the trade and other payables on a common-size statement of
financial position?
a. 13.3% b. 10.0% c. 5.3% d. 4.0%

3. How would the company present the operating expenses on a common-size income statement?
a. 11.0% b. 14.7% c. 25.5% d. 27.5%

PROBLEM 2
Selected items in the statement of comprehensive income of NICANOR Trading are as follows:

Sales 3,675,000
Sales Discounts and Allowances 175,000
Office Supplies 52,500
Advertising Expense 71,000
Utilities Expense 177,500
Interest Expense 35,000

The gross profit of the company is 40% of net sales, and the applicable tax rate for the period is 30%.

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Questions:
4. In the common-size statement of comprehensive income, sales discounts and allowances will have
a proportional percentage of
a. 4.76% b. 5.00% c. 4.55% d. 95.23%

5. Office supplies will appear in the common-size of comprehensive income as?

a. 1.43% b. 1.46% c. 1.50% d. 2.5%

6. The proportional percentage of interest expense in the statement of comprehensive income

would be?
a. 1.00% b. 0.95% c. 0.91% d. 1.15%

7. Using the same data in Problem 2, the business expects to allocate 8% proportional component
for salaries and wages in the common-size statement of comprehensive income, the absolute
amount for salaries and wages would be:
a. 176,000 b. 280,000 c. 294,000 d. 308,000

PROBLEM 3
Jenny Merchandising provided the following comparative information:

2018 2017
Trade and other receivables 300,000 450,000
Inventory 390,000 980,000
Property, Plant and Equipment 4,000,000 4,500,000
Bank Loan Payable 1,000,000 1,000,000
Mortgage Payable 3,000,000 -
Questions:
8. The percentage of change of trade and other receivables that will appear on the horizontal
analysis?
a. 0.0% b. 33.3% increase c. 33.3% decrease d. 66.7% decrease

9. The percentage of change of bank loan payable that will appear on the horizontal analysis would
be:
a. 0.0% b. 50% increase c. 100% increase d. 100% decrease

10. What will be the percentage of change of mortgage payable that will appear on the horizontal
analysis?
a. Nil b. 50% increase c. 100% increase d. 100% decrease

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