Suppose in 20012 total equity and liabilities for a business amounted to $600,000 and total liabilities amounted to $400,000. The following year, total equity and liabilities increased to $700,000 while liabilities increased to $450,000. According to the vertical analysis method, has the financial situation become better or worse?
A) Better because total equity reduced as a percentage of total equity and liabilities.
B) Better because total liabilities increased faster than total equity and liabilities.
C) Better because the company was able to finance its operations with more debt.
D) Better because the total liabilities reduced as a percentage of total equity and liabilities.

Question

Quizplus · Accepted Answer

The Answer of Suppose in 20012 total equity and liabilities for a business amounted to $600,000 and total liabilities amounted to $400,000. The following year, total equity and liabilities increased to $700,000 while liabilities increased to $450,000. According to the vertical analysis method, has the financial situation become better or worse?
A) Better because total equity reduced as a percentage of total equity and liabilities.
B) Better because total liabilities increased faster than total equity and liabilities.
C) Better because the company was able to finance its operations with more debt.
D) Better because the total liabilities reduced as a percentage of total equity and liabilities.

Suppose in 20012 Total Equity and Liabilities for a Business