I need help understanding how to work through this problem, I understand that the horizontal analysis will be comparing the two years side my side so I am okay with that one but I am stuck on #1 and how to complete it.

Part A - Chapter 21 in your textbook contains examples that will be helpful for completing the exercises below.

1.Using Excel formulas, prepare a vertical analysis for 2017 for the balance sheet below (only use 2017).

2.Using Excel formulas, prepare a horizontal analysis for the balance sheet below (use 2016 & 2017 - also note the order of the columns below).

3.Compute the following ratios and show the answer to two digits past the decimal:

(i) the current ratio,

(ii) the acid-test ratio.Use Excel formulas in the cells indicated below in yellow for calculating your ratios.Formulas for this exercise are located on page 779 in your textbook or on the Table 21-1 tab in this Excel file. Current ratio: 1.78 Acid-test ratio:

4.Using Table 21-1, how would you interpret the current ratio result you computed above?

5.Using Table 21-1, how would you interpret the acid-test ratio result you computed above?

Green's Landscaping

Balance Sheet

December 31, 2016 and 2017

2017 2016

Assets

Current Assets

Cash $4,385 $4,517

Accounts receivable 7,715 5,018

Merchandise inventory 45,222 48,822

Total current assets 57,322 58,357

Plant and equipment

Equipment 22,373 25,962

Total assets 79,695 84,319

Liabilities

Current liabilities

Accounts payable 3,366 4,576

Wages payable 1,850 1,983

Total current liabilities 5,216 6,559

Long-term liabilities

Mortgage note payable 39,664 45,999

Total liabilities 44,880 52,558

Owner's Equity

A. Green, capital 34,815 31,761

Total liabilities and owner's equity 79,695 84,319