Vertical analysis makes it easy to compare financial statements with industry standards, which are average percentages for companies in the same industry. Assume these partial vertical analyses of an income statement and balance sheet are for the pet food and pet supply industry. 

INSTRUCTIONS 

Use PETsMART’s financial statements in Appendix F for these tasks.

1. Complete a vertical analysis of PETsMART’s cost of sales and gross profit for the year ended February 1, 2004. Compare them to the industry standards above.

2. Complete a vertical analysis of PETsMART’s assets using the classifications above, as of February 1, 2004. Compare PETsMART’s asset mix with the industry standard.

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Income Statement Vertical Analysis 100.0% 68.9 31.1% Balance Sheet Vertical Analysis 34.3% 49.3 16.4 100.0% Net sales Cost of sales Gross profit Current assets Property & equipment All other assets Total assets