Rachel owns a franchise restaurant of a large restaurant chain in New England. Help her calculate a vertical analysis of her balance sheet.

RACHEL’S RESTAURANT Balance Sheet December 31, 20XX (aa eI a Assets Current Assets Cash 57,317 Marketable Securities 130,769 Inventories 34,545 Total Current Assets Investments 248,837 Property and Equipment Land 206,053 Building 418,665 Furnishings and Equipment 205,556 Less Accumulated Depreciation Net Property and Equipment Other Assets Total Assets —a Liabilities and Owners’ Equity Current Liabilities 142,439 31,905 147,907 Accounts Payable Notes Payable Other Current Liabilities Total Current Liabilities Long-Term Liabilities SS ae Long-Term Debt ah 218,272 ie Total Liabilities Owners’ Equity =e ee Zl|
Common Stock 78,947 Paid in Capital 324,324 Retained Earnings 318,333 Total Owners’ Equity Total Liabilities and Owners’ Equity Rachel has been asked by her regional manager to compare her balance sheet percentages with the averages of the chain. Select percentages of the chain follow:
Select Chain Percentages (Vertical Analysis)
Cash 6.70%
Inventories 1.30%
Accounts Payable 10.50%
Notes Payable 1.10%

a. Compare Rachel’s Cash % with the chain’s %. Is it higher or lower? What might this mean?

b. Compare Rachel’s Inventories % with the chain’s %. Is it higher or lower? What might this mean?

c. Compare Rachel’s Accounts Payable % with the chain's %. Is it higher or lower?
What might this mean?

d. Compare Rachel’s Notes Payable % with the chain’s %. Is it higher or lower? What might this mean?