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

question 69

Multiple Choice

Please refer to the vertical analysis of a section of a balance sheet,shown below:
$$\begin{array} { | l | r | r | r | r | } \hline { \text { (Dollar amounts in millions) } } & { \mathbf { 2 0 1 7 } } & & { \mathbf { 2 0 1 6 } } & \\\hline & \text { Amount } & \text { \% of total } & \text { Amount } & \% \text { of total } \\\hline \text {Assest}\\\hline \text { Current assets: } & & & & \\\hline \text { Cash } &\$ 10000 & 3.7 \% & \$ 7200 & 2.9 \% \\\hline \text { Accounts receivable, net } &15,600&5.7\%&16800&6.7\% \\\hline \text { Inventory } & 38000 & 13.9\% &31000 & 12.4 \% \\\hline \text { Total current assets } & 63600 & 23.2 \% & 55000 & 22.0 \% \\\hline \text { Property, plant and equipment, net } & 195000 & 71.3 \% & 168000 & 67.2 \% \\\hline \text { Other non-current assets } & 15000 & 5.5 \% & 27100 & 10.8 \% \\\hline \text { Total assets } & \$ 273600 & 100.0 \% & \$ 250100 & 100.0 \% \\\hline\end{array}$$
Which of the following statements is valid regarding the data shown above?

• A) Other non-current assets dropped 5.5% over the two year period.
• B) In 2017, Inventory represented 13.9% of net sales revenues.
• C) Cash grew 3.7% over the previous year balance.
• D) Property, plant and equipment grew as a percentage of total assets over the two year period.

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Definitions:

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behaviors remain valid.

Relevant Range

The range of activity or volume over which the assumptions about fixed and variable costs are valid.

Variable Cost

Expenses that vary directly with the level of production or sales volume, such as materials, labor, and utility costs.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much contributes to fixed expenses and profit.