Reliable Moving Company reported the following amounts on its balance sheet as of December 31, 2019 and December 31, 2018: 2019 2018 Cash and Receivables $ 165 comma 000 $ 115 comma 000 Merchandise Inventory 195 comma 000 250 comma 000 Property, Plant and Equipment, net 760 comma 000 700 comma 000 Total Assets $ 1 comma 120 comma 000 $ 1 comma 065 comma 000 Total Liabilities $ 475 comma 000 $ 425 comma 000 For the vertical analysis, what is the percentage of total liabilities for December 31, 2018? (Round your answer to two decimal places.)

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TomShelby TomShelby · Answer 1 · 2019-09-30T21:58:02+02:00

Answer:

Total liabilities: 42.41%

Explanation:

On a vertical analysis the balance sheet values are expressed as a percentage of total assets.

We will express the total liaiblities as a percentage of total assets.

[tex]\frac{liabilities}{assets} \times 100[/tex]

[tex]\frac{475,000}{1,120,000} \times 100 = 42,41[/tex]

The reasoning for this is kind of analysis is to compare the values as relatives rather than nominal values.

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