CheckPoint: Ratio, Vertical, and Horizontal Analyses
The calculations you perform for this CheckPoint form the basis of your analysis of your capstone
project.
• Write in 100 to 200 words an explanation of the three tools of financial statement analysis
and the function of each.
• Examine PepsiCo, Inc.’s Consolidated Balance Sheet on p. A6 in Appendix A of Financial
Accounting, especially its Current Assets, Current Liabilities, and Total Assets for years 2005
and 2004.
• Calculate the following for PepsiCo, Inc. and show your work:
o The Current Ratio for 2005
o The Current Ratio for 2004
o Two measures of vertical analysis—for example, compute the current assets divided by
total assets for each year, and express your result as a percentage
o Two measures of horizontal analysis—for example, compute the total change in assets
by percentage, by dividing current assets in 2005 by current assets in 2004. Compute a
similar percentage for current liabilities
• Examine The CocaCola Company’s Consolidated Balance sheet on p. B2 in Appendix B of
Financial Accounting, especially its Current Assets, Current Liabilities, and Total Assets for
years 2005 and 2004.
• Calculate the following for CocaCola and show your work:
o The Current Ratio for 2005
o The Current Ratio for 2004
o Two measures of vertical analysis—for example, compute the current assets divided by
total assets for each year, and express your result as a percentage
o Two measures of horizontal analysis—for example, compute the total change in assets
by percentage, by dividing current assets in 2005 by current assets in 2004. Compute a
similar percentage for current liabilities
• Post your explanation and calculations.
