Please Refer to the Vertical Analysis of a Section of a Balance

question 142

Multiple Choice

Please refer to the vertical analysis of a section of a balance sheet, shown below: $\begin{array}{|l|r|r|r|r|}\hline \text { (Dollar amounts in millions) } & 2014 & & 2013 & \\\hline & \text { Amount } & \text { \% of Total } & \text { Amount } & \text { \% of Total } \\\hline \text { Assets } & & & & \\\hline \text { Current assets: } & & & & \\\hline \text { Cash } & \$ 10,000 & 3.7 \% & \$ 7,200 & 2.9 \% \\\hline \text { Accounts receivable, net } & 15,600 & 5.7 \% & 16,800 & 6.7 \% \\\hline \text { Inventory } & 38,000 & 13.9 \% & 31,000 & 12.4 \% \\\hline \text { Total current assets } & 63,600 & 23.2 \% & 55,000 & 22.0 \% \\\hline \text { Property, plant and equipment, net } & 195,000 & 71.3 \% & 168,000 & 67.2 \% \\\hline \text { Other long-term assets } & 15,000 & 5.5 \% & 27,100 & 10.8 \% \\\hline \text { Total assets } & \$ 273,600 & 100.0 \% & \$ 250,100 & 100.0 \% \\\hline\end{array}$


- Which of the following statements accurately describes the 13.9% shown for Inventory in 2014?

• A) In 2014, inventory grew 13.9% over the previous year.
• B) In 2014, inventory is equal to 13.9% of total assets.
• C) In 2014, inventory was equal to 13.9% of the cash balance.
• D) Inventory declined as a percentage of total assets over the 2-year period.

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Definitions:

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The state of being ready and well-prepared for various situations or emergencies.

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Seligman

A psychologist best known for his work on learned helplessness, positive psychology, and well-being.