Checkpoint ratio, vertical, and horizontal analyses Assignment

Checkpoint ratio, vertical, and horizontal analyses - Assignment ExampleIt helps to understand the quantity of an item in the financial affirmation as a percentage of a whole and equate over a horizon of many an(prenominal) years. Comparing current assets as percentage of total assets in year1 and year2 would be an example of vertical analysis. plain analysis helps in analyzing the various items over a period of time either in absolute numbers or in percentage. Example, change in sales (+ or -) figures in year1 as compargon to previous year.The current ratio shows that Pepsico is showing a decreasing trend from 1.28 in 2004 to 1.11 in 2005 (appendix). Coca-Cola is similarly showing a similar trend with the ratio at 1.10 in 2004 and 1.04 in 2005 (appendix). This shows that both the companies are increasing their short bourne financing. They can afford to do this at present as both companies have their current liabilities adequately covered. However, the trend could be alarming for their short term liquidity jell in the future if it continues, especially for Coca-Cola which has almost equal amount of current assets covering the current liabilities ($1.04 for every(prenominal) $1 of current liability).Vertical analysis of Assets shows that for Pepsico current assets component of total assets has change magnitude marginally in 2005 over the previous year (appendix). The current liabilities as percentage of total liabilities has increased drastically which shows that the political party is financing more through short term obligations rather than long term debt. A get along component analysis reveals a clearer picture. There has been a major increase in short term liabilities and taxes showing an increased short term financing for growing business (appendix). For coca-cola current liabilities have increased and assets decreased again showing increased short term financing (appendix).Horizontal analysis of Pepsico shows that on that point has been an inc rease in current assets and liabilities