Assignment 6.1 - Reply 1

Respond to the discussion below with proper punctuation, capitalization, and grammar in a minimum of 100 words. Support your evaluation with at least two scholarly or professional journal articles written in the United States of America within the last five years cited in APA format. Consult the grading rubric in the Faculty & Course Info section to ensure you are meeting the assignment's criteria, as this information in conjunction with the rubric will be used to assess your work.

Both horizontal and vertical financial statement analysis use percentages to give a more readily understandable reference for complicated numbers.

In horizontal analysis you take a period of intervals and assign percentage values of a base year. For example, you could take year-end financial statements from 2005-2015. Make 2005 the base year and give it a value of 100 (100%) for each item in the financial statement. Then, each subsequent year, list the amount as a percentage of the 2005 value. So, if 2005 sales were $1,000,000 and 2006 sales were $1,200,000, 2005 and 2006 sales would be listed as 100 and 120, respectively. You can use this analysis to compare how each item has changed relative to other items. An example of how this information may be useful is if you see that advertising costs have been increasing and sales have been decreasing, you may determine that the advertising being used is not effective.

In vertical analysis you list each item on the financial statement as a percentage of another item. For example, on the balance sheet if stockholder equity is listed as $1,000,000 and retained earnings is listed as $500,000, then retained earnings would be 50 (50%). If total assets is listed as $1,000,000 and accounts receivable is listed as $200,000, then accounts receivable would be 20. This method shows each item as a percentage of a whole. Like horizontal analysis, vertical analysis could be used to show year over year shifts, but it would de so as a percentage of the whole instead of percentage from a base year.

To determine which method of analysis is more useful, I believe it would depend upon what your role and purpose is for the analysis. If I was an investor, I may find vertical analysis more beneficial because it would be more readily comparable to other companies. Conversely, if I was a manager at the company being analyzed, I may prefer horizontal analysis so that I could recognize growth or losses compared to previous years. Obviously, both methods could be beneficial for both purposes.

--Matt P.

A Outstanding 45% Possible Discussion Prompt Response Comprehension 40.5% - 45.0% 250-350 word post demonstrates conceptual understanding, presents arguments and defends rationale by exceptionally supporting answer with at least three reputable sources (other than course text or materials) and incorporates a real world application. DISCUSSION GRADING RUBRIC B C Good Average 36.0% - 40.4% 250-350 word post demonstrates conceptual understanding, presents arguments and defends rationale by strongly supporting answer with at least two reputable sources (other than course text or materials). 31.5% - 35.9% 250-350 word post demonstrates conceptual understanding, presents arguments and defends rationale by adequately supporting answer with at least two reputable sources (other than course text or materials). D Below Average F Unacceptable 27.0% - 31.4% 0 Post may not meet 250- Demonstrates little effort 350 word minimum or or understanding of may demonstrate partial concepts. conceptual understanding, or presentation of arguments and defense of rationale has inadequate support from reputable sources (other than course text or materials). Comments: 35% Possible Two Peer Responses Engagement 31.5% - 35.0% 100 word minimum responses elevate discussion by presenting arguments and defending rationale by strongly supporting response with a reputable source (other than course text or materials) and incorporates a real world application. 28.0% - 31.4% 100 word minimum responses elevate discussion by presenting arguments and defending rationale by moderately supporting response with a reputable source (other than course text or materials) or incorporates a real world application. 24.5% - 27.9% 100 word minimum responses elevate discussion by presenting arguments and defending rationale by adequately supporting response by incorporating a real world application. 21.0% - 24.4% 0 Responses may not meet Demonstrates little effort 100 word minimum, may or understanding of not present valid concepts. arguments, may not defend rationale, or presentation of arguments and defense of rationale has inadequate support from reputable sources (other than course text or materials). Comments: 10% Possible Writing Mechanics Delivery 9.0% - 10.0% Posts have a clear and specific thesis or focus on a single specific idea using smooth and logical transitions, excellent writing voice, flawless grammar, correct spelling, and proper APA in-text citations and reference list. 8.0% - 8.9% Posts have a clear and specific thesis or focus on a single specific idea using smooth and logical transitions, strong writing voice, with only minor grammatical or spelling errors, and APA in-text citations and reference list. 7.0% - 7.9% Posts may have a general focus but are vague or lacking easily identifiable specifics; may lack consistent organization and have distracting writing traits, noticeable grammatical errors and incorrect spelling, and APA in-text citations and reference list. 6.0% - 6.9% 0 Posts do not focus on a Posts lack a unifying single idea, fall short of claim or idea, show little expected SCPS writing effort, or are incomplete. competencies, ideas are masked by a saturation of grammatical errors or incorrect spelling, and APA in-text citations and reference list are incorrect or missing. Comments: 5% Possible Timeliness Consideration 4.5% - 5.0% Assists peers with initial post made by Tuesday, peer response posts by Friday, and once a conversation is entered, remains engaged through Sunday. 4.0% - 4.4% Initial post is made by Thursday and assists peers with response posts by Friday, and once a conversation is entered, remains engaged through Sunday. 3.5% - 3.9% Initial post is made by Thursday, peer response posts by Sunday, and once a conversation is entered, remains engaged through Sunday. 3.0% - 3.4% 0 Posts may not have meet Posts are missing. required deadlines or were not managed through Sunday. Comments: 5% Possible Frequency Participation 4.5% - 5.0% 4.0% - 4.4% 3.5% - 3.9% 3.0% - 3.4% 0 Posts in this discussion on 4 Posts in this discussion on Posts in this discussion on May not post on multiple Did not participate. days. 3 days. 2 days. days. Comments: Total Percentage __________ x Assignment Value __________ = Score __________