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

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

2.Using Excel formulas, creating 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: 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 $5,275 $4,507

Accounts receivable 7,305 5,118

Merchandise inventory 45,522 48,722

Total current assets 58,102 58,347

Plant and equipment

Equipment 20,173 25,942

Total assets 78,275 84,289

Liabilities

Current liabilities

Accounts payable 3,809 4,476

Wages payable 2,432 1,973

Total current liabilities 6,241 6,449

Long-term liabilities

Mortgage note payable 36,454 45,899

Total liabilities 42,695 52,348

Owner's Equity

A. Green, capital 35,580 31,941

Total liabilities and owner's equity 78,275 84,289