{"id":389,"date":"2024-09-06T16:49:22","date_gmt":"2024-09-06T16:49:22","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/vertical-analysis\/"},"modified":"2024-09-11T19:15:46","modified_gmt":"2024-09-11T19:15:46","slug":"vertical-analysis","status":"publish","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/vertical-analysis\/","title":{"raw":"Vertical Analysis","rendered":"Vertical Analysis"},"content":{"raw":"<section class=\"textbox learningGoals\" aria-label=\"Learning Goals\">\r\n<ul>\r\n \t<li>Perform a vertical analysis of a company's financial statements<\/li>\r\n<\/ul>\r\n<\/section>&nbsp;\r\n\r\nA vertical analysis of financial statements often reports the percentage of each line item to a total amount. Vertical analysis can be used to compare and identify trends within a company from year to year (intracompany) or between different companies (intercompany).\r\n<h2>Intracompany Analysis<\/h2>\r\nOn the comparative income statement, the amount of each line item is divided by the sales number, which is called the \u201cbase\u201d.\r\n<table class=\"fin-table acctstatement\"><caption>Jonick Company\r\nComparative Income Statement\r\nFor the Years Ended December 31, 2019 and 2018<\/caption>\r\n<tbody>\r\n<tr>\r\n<th class=\"u-sr-only\" scope=\"col\">Description<\/th>\r\n<th scope=\"col\">2019<\/th>\r\n<th scope=\"col\">2019 (%)<\/th>\r\n<th scope=\"col\">2018<\/th>\r\n<th scope=\"col\">2018 (%)<\/th>\r\n<\/tr>\r\n<tr>\r\n<td>Sales<\/td>\r\n<td class=\"r\">$994,000<\/td>\r\n<td class=\"r\">100.00%<\/td>\r\n<td class=\"r\">$828,000<\/td>\r\n<td class=\"r\">100.00%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost of merchandise sold<\/td>\r\n<td class=\"r\">414,000<\/td>\r\n<td class=\"r\">41.6%<\/td>\r\n<td class=\"r\">393,000<\/td>\r\n<td class=\"r\">47.5%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Gross Profit<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$580,000<\/td>\r\n<td class=\"r\">58.4%<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$435,000<\/td>\r\n<td class=\"r\">52.5%<\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Operating Expenses:<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 Salaries expense<\/td>\r\n<td class=\"r\">$77,000<\/td>\r\n<td class=\"r\">7.7%<\/td>\r\n<td class=\"r\">$64,000<\/td>\r\n<td class=\"r\">7.7%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 Rent expense<\/td>\r\n<td class=\"r\">63,000<\/td>\r\n<td class=\"r\">6.3%<\/td>\r\n<td class=\"r\">52,000<\/td>\r\n<td class=\"r\">6.3%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 Insurance expense<\/td>\r\n<td class=\"r\">56,000<\/td>\r\n<td class=\"r\">5.6%<\/td>\r\n<td class=\"r\">46,000<\/td>\r\n<td class=\"r\">5.6%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 Supplies expense<\/td>\r\n<td class=\"r\">49,000<\/td>\r\n<td class=\"r\">4.9%<\/td>\r\n<td class=\"r\">41,000<\/td>\r\n<td class=\"r\">5.0%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 Advertising expense<\/td>\r\n<td class=\"r\">42,000<\/td>\r\n<td class=\"r\">4.2%<\/td>\r\n<td class=\"r\">35,000<\/td>\r\n<td class=\"r\">4.2%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 Depreciation expense<\/td>\r\n<td class=\"r\">35,000<\/td>\r\n<td class=\"r\">3.5%<\/td>\r\n<td class=\"r\">29,000<\/td>\r\n<td class=\"r\">3.5%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 Utilities expense<\/td>\r\n<td class=\"r\">28,000<\/td>\r\n<td class=\"r\">2.8%<\/td>\r\n<td class=\"r\">23,000<\/td>\r\n<td class=\"r\">2.8%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total operating expense<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>348,000<\/td>\r\n<td class=\"r\">35.0%<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>290,000<\/td>\r\n<td class=\"r\">35.0%<\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"3\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Net income from operations<\/td>\r\n<td class=\"r\">$232,000<\/td>\r\n<td class=\"r\">23.3%<\/td>\r\n<td class=\"r\">$145,000<\/td>\r\n<td class=\"r\">17.5%<\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Other revenue and expenses<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 Gain on sale of investments<\/td>\r\n<td class=\"r\">$137,000<\/td>\r\n<td class=\"r\">13.8%<\/td>\r\n<td class=\"r\">$186,000<\/td>\r\n<td class=\"r\">22.5%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 Interest expense<\/td>\r\n<td class=\"r\">(55,000)<\/td>\r\n<td class=\"r\">5.5%<\/td>\r\n<td class=\"r\">(50,000)<\/td>\r\n<td class=\"r\">6.0%<\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td><\/td>\r\n<td class=\"line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td><\/td>\r\n<td class=\"line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Income before income tax<\/td>\r\n<td class=\"r\">$314,000<\/td>\r\n<td class=\"r\">31.6%<\/td>\r\n<td class=\"r\">$281,000<\/td>\r\n<td class=\"r\">33.9%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Income tax expense<\/td>\r\n<td class=\"r\">66,000<\/td>\r\n<td class=\"r\">6.6%<\/td>\r\n<td class=\"r\">50,000<\/td>\r\n<td class=\"r\">6.0%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Net income<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$248,000 <span class=\"u-sr-only\">Double Line<\/span><\/td>\r\n<td class=\"r\">24.9%<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$231,000 <span class=\"u-sr-only\">Double Line<\/span><\/td>\r\n<td class=\"r\">27.9%<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nOn the comparative balance sheet, the amount of each line item is divided by total assets.\r\n<table class=\"fin-table acctstatement\"><caption>Jonick Company\r\nComparative Balance Sheet\r\nDecember 31, 2019 and 2018<\/caption>\r\n<tbody>\r\n<tr>\r\n<th><\/th>\r\n<th scope=\"col\">2019<\/th>\r\n<th scope=\"col\">2019 (%)<\/th>\r\n<th scope=\"col\">2018<\/th>\r\n<th scope=\"col\">2018 (%)<\/th>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span style=\"text-transform: uppercase;\"><strong>Assets<\/strong><\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Current assets:<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cash<\/td>\r\n<td class=\"r\">$373,000<\/td>\r\n<td class=\"r\">9.4%<\/td>\r\n<td class=\"r\">$331,000<\/td>\r\n<td class=\"r\">9.2%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Marketable securities<\/td>\r\n<td class=\"r\">248,000<\/td>\r\n<td class=\"r\">6.3%<\/td>\r\n<td class=\"r\">215,000<\/td>\r\n<td class=\"r\">6.0%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Accounts receivable<\/td>\r\n<td class=\"r\">108,000<\/td>\r\n<td class=\"r\">2.7%<\/td>\r\n<td class=\"r\">91,000<\/td>\r\n<td class=\"r\">2.5%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Merchandise Inventory<\/td>\r\n<td class=\"r\">55,000<\/td>\r\n<td class=\"r\">1.4%<\/td>\r\n<td class=\"r\">48,000<\/td>\r\n<td class=\"r\">1.3%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Prepaid insurance<\/td>\r\n<td class=\"r\">127,000<\/td>\r\n<td class=\"r\">3.2%<\/td>\r\n<td class=\"r\">115,000<\/td>\r\n<td class=\"r\">3.2%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 <strong>Total current assets<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$911,000<\/td>\r\n<td class=\"r\">23.1%<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$800,000<\/td>\r\n<td class=\"r\">22.2%<\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Long-term investments:<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Investment in equity securities<\/td>\r\n<td class=\"r\">$1,946,000<\/td>\r\n<td class=\"r\">49.3%<\/td>\r\n<td class=\"r\">$1,822,000<\/td>\r\n<td class=\"r\">50.5%<\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Property, plant and equipment:<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Equipment (net of accumulated depreciation)<\/td>\r\n<td class=\"r\">$87,000<\/td>\r\n<td class=\"r\">2.2%<\/td>\r\n<td class=\"r\">$42,000<\/td>\r\n<td class=\"r\">1.2%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Building (net of accumulated depreciation)<\/td>\r\n<td class=\"r\">645,000<\/td>\r\n<td class=\"r\">16.3%<\/td>\r\n<td class=\"r\">581,000<\/td>\r\n<td class=\"r\">16.1%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Land<\/td>\r\n<td class=\"r\">361,000<\/td>\r\n<td class=\"r\">9.1%<\/td>\r\n<td class=\"r\">361,000<\/td>\r\n<td class=\"r\">10.0%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 <strong>Total property, plant and equipment<\/strong><\/td>\r\n<td class=\"r\">$1,093,000<\/td>\r\n<td class=\"r\">27.7%<\/td>\r\n<td class=\"r\">$984,000<\/td>\r\n<td class=\"r\">27.3%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0<strong>Total assets<\/strong><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$3,950,000<span class=\"u-sr-only\">Double Line<\/span><\/td>\r\n<td class=\"r\">100.00%<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$3,606,000<span class=\"u-sr-only\">Double Line<\/span><\/td>\r\n<td class=\"r\">100.00%<\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span style=\"text-transform: uppercase;\"><strong>Liabilities<\/strong><\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Current liabilities:<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Accounts payable<\/td>\r\n<td class=\"r\">$120,000<\/td>\r\n<td class=\"r\">3.0%<\/td>\r\n<td class=\"r\">$109,000<\/td>\r\n<td class=\"r\">3.0%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Salaries payable<\/td>\r\n<td class=\"r\">244,000<\/td>\r\n<td class=\"r\">6.2%<\/td>\r\n<td class=\"r\">222,000<\/td>\r\n<td class=\"r\">6.2%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 <strong>Total current liabilities<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$364,000<\/td>\r\n<td class=\"r\">9.2%<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$331,000<\/td>\r\n<td class=\"r\">9.2%<\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Long-term liabilities<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Mortgage note payable<\/td>\r\n<td class=\"r\">$83,000<\/td>\r\n<td class=\"r\">2.1%<\/td>\r\n<td class=\"r\">$83,000<\/td>\r\n<td class=\"r\">2.3%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Bonds payable<\/td>\r\n<td class=\"r\">828,000<\/td>\r\n<td class=\"r\">21.0%<\/td>\r\n<td class=\"r\">745,000<\/td>\r\n<td class=\"r\">20.7%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 <strong>Total long-term liabilities<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$911,000<\/td>\r\n<td class=\"r\">23.1%<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$828,000<\/td>\r\n<td class=\"r\">23.0%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0<strong>Total liabilities<\/strong><\/td>\r\n<td class=\"r line-double\">$1,275,000<span class=\"u-sr-only\">Double Line<\/span><\/td>\r\n<td class=\"r\">32.3%<\/td>\r\n<td class=\"r line-double\">$1,159,000<span class=\"u-sr-only\">Double Line<\/span><\/td>\r\n<td class=\"r\">32.1%<\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"5\"><span style=\"text-transform: uppercase;\"><strong>Stockholders' Equity<\/strong><\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Preferred $1.50 stock, $20 par<\/td>\r\n<td class=\"r\">$166,000<\/td>\r\n<td class=\"r\">2.1%<\/td>\r\n<td class=\"r\">$166,000<\/td>\r\n<td class=\"r\">2.3%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Common stock, $10 par<\/td>\r\n<td class=\"r\">83,000<\/td>\r\n<td class=\"r\">4.2%<\/td>\r\n<td class=\"r\">83,000<\/td>\r\n<td class=\"r\">4.6%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Retained earnings<\/td>\r\n<td class=\"r\">2,426,000<\/td>\r\n<td class=\"r\">61.4%<\/td>\r\n<td class=\"r\">2,198,000<\/td>\r\n<td class=\"r\">61.0%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 <strong>Total stockholders' equity<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$2,675,000<\/td>\r\n<td class=\"r\">67.7%<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$2,447,000<\/td>\r\n<td class=\"r\">67.9%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td><strong>Total liabilities and stockholders' equity<\/strong><\/td>\r\n<td class=\"r line-double\">$3,950,000<span class=\"u-sr-only\">Double Line<\/span><\/td>\r\n<td class=\"r\">100.00%<\/td>\r\n<td class=\"r line-double\">$3,606,000<span class=\"u-sr-only\">Double Line<\/span><\/td>\r\n<td class=\"r\">100.00%<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nOn both financial statements, percentages are presented for two consecutive years in order for the percent changes over time to be evaluated.\r\n<h2>Intercompany Analysis<\/h2>\r\nThe use of percentages converts a company\u2019s dollar amounts on its financial statements into values that can be compared to other companies whose dollar amounts may be different.\r\n\r\nCommon-size statements include only the percentages that appear in either a horizontal or vertical analysis. They often are used to compare one company to another or to compare a company to other standards, such as industry averages.\r\n\r\nThe following compares the performance of two companies using a vertical analysis on their income statements for 2019.\r\n<table class=\"fin-table acctstatement\"><caption>Jonick Company\r\nComparative Income Statement\r\nFor the Years Ended December 31, 2019<\/caption>\r\n<tbody>\r\n<tr>\r\n<th class=\"u-sr-only\" scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Jonick<\/th>\r\n<th scope=\"col\">Schneider<\/th>\r\n<\/tr>\r\n<tr>\r\n<td>Sales<\/td>\r\n<td class=\"r\">100%<\/td>\r\n<td class=\"r\">100%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Cost of merchandise sold<\/td>\r\n<td class=\"r\">41.6%<\/td>\r\n<td class=\"r\">47.5%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Gross Profit<\/td>\r\n<td class=\"r\">58.4%<\/td>\r\n<td class=\"r\">52.5%<\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"3\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total operating expense<\/td>\r\n<td class=\"r\">35.0%<\/td>\r\n<td class=\"r\">35.0%<\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"3\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Net income from operations<\/td>\r\n<td class=\"r\">23.3%<\/td>\r\n<td class=\"r\">17.5%<\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"3\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"3\"><span class=\"u-sr-only\">Subcategory, <\/span>Other revenue and expenses<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 Gain on sale of investments<\/td>\r\n<td class=\"r\">13.8%<\/td>\r\n<td class=\"r\">22.5%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0 \u00a0 \u00a0 Interest expense<\/td>\r\n<td class=\"r\">5.5%<\/td>\r\n<td class=\"r\">6.0%<\/td>\r\n<\/tr>\r\n<tr aria-hidden=\"true\">\r\n<td colspan=\"3\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Income before income tax<\/td>\r\n<td class=\"r\">31.6%<\/td>\r\n<td class=\"r\">33.9%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Income tax expense<\/td>\r\n<td class=\"r\">6.6%<\/td>\r\n<td class=\"r\">6.0%<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Net income<\/td>\r\n<td class=\"r\">24.9%<\/td>\r\n<td class=\"r\">27.9%<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThe common-size income statements for Jonick Corporation and Schneider Corporation show that Schneider has lower gross profit and net income from operations percentages to sales. Yet Schneider has a higher overall net income due to much greater gains on the sale of investments.\r\n\r\nFrom an investor\u2019s standpoint, Jonick is better at making money from operations. Schneider may or may not be able to sustain profits from sales of investments. Normally, if you were comparing retail or manufacturing companies, you would be more interested in profits from operations, since that is the core business function. This analysis might lead you back to more a horizontal analysis of Schneider and Jonick in order to determine why so much income is being generated from the sale of investments.\r\n\r\nNow, take what you've learned and practice your knowledge.\r\n\r\n<section class=\"textbox tryIt\" aria-label=\"Try It\">[ohm2_question hide_question_numbers=1]25263[\/ohm2_question]<\/section>","rendered":"<section class=\"textbox learningGoals\" aria-label=\"Learning Goals\">\n<ul>\n<li>Perform a vertical analysis of a company&#8217;s financial statements<\/li>\n<\/ul>\n<\/section>\n<p>&nbsp;<\/p>\n<p>A vertical analysis of financial statements often reports the percentage of each line item to a total amount. Vertical analysis can be used to compare and identify trends within a company from year to year (intracompany) or between different companies (intercompany).<\/p>\n<h2>Intracompany Analysis<\/h2>\n<p>On the comparative income statement, the amount of each line item is divided by the sales number, which is called the \u201cbase\u201d.<\/p>\n<table class=\"fin-table acctstatement\">\n<caption>Jonick Company<br \/>\nComparative Income Statement<br \/>\nFor the Years Ended December 31, 2019 and 2018<\/caption>\n<tbody>\n<tr>\n<th class=\"u-sr-only\" scope=\"col\">Description<\/th>\n<th scope=\"col\">2019<\/th>\n<th scope=\"col\">2019 (%)<\/th>\n<th scope=\"col\">2018<\/th>\n<th scope=\"col\">2018 (%)<\/th>\n<\/tr>\n<tr>\n<td>Sales<\/td>\n<td class=\"r\">$994,000<\/td>\n<td class=\"r\">100.00%<\/td>\n<td class=\"r\">$828,000<\/td>\n<td class=\"r\">100.00%<\/td>\n<\/tr>\n<tr>\n<td>Cost of merchandise sold<\/td>\n<td class=\"r\">414,000<\/td>\n<td class=\"r\">41.6%<\/td>\n<td class=\"r\">393,000<\/td>\n<td class=\"r\">47.5%<\/td>\n<\/tr>\n<tr>\n<td>Gross Profit<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$580,000<\/td>\n<td class=\"r\">58.4%<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$435,000<\/td>\n<td class=\"r\">52.5%<\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Operating Expenses:<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 Salaries expense<\/td>\n<td class=\"r\">$77,000<\/td>\n<td class=\"r\">7.7%<\/td>\n<td class=\"r\">$64,000<\/td>\n<td class=\"r\">7.7%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 Rent expense<\/td>\n<td class=\"r\">63,000<\/td>\n<td class=\"r\">6.3%<\/td>\n<td class=\"r\">52,000<\/td>\n<td class=\"r\">6.3%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 Insurance expense<\/td>\n<td class=\"r\">56,000<\/td>\n<td class=\"r\">5.6%<\/td>\n<td class=\"r\">46,000<\/td>\n<td class=\"r\">5.6%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 Supplies expense<\/td>\n<td class=\"r\">49,000<\/td>\n<td class=\"r\">4.9%<\/td>\n<td class=\"r\">41,000<\/td>\n<td class=\"r\">5.0%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 Advertising expense<\/td>\n<td class=\"r\">42,000<\/td>\n<td class=\"r\">4.2%<\/td>\n<td class=\"r\">35,000<\/td>\n<td class=\"r\">4.2%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 Depreciation expense<\/td>\n<td class=\"r\">35,000<\/td>\n<td class=\"r\">3.5%<\/td>\n<td class=\"r\">29,000<\/td>\n<td class=\"r\">3.5%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 Utilities expense<\/td>\n<td class=\"r\">28,000<\/td>\n<td class=\"r\">2.8%<\/td>\n<td class=\"r\">23,000<\/td>\n<td class=\"r\">2.8%<\/td>\n<\/tr>\n<tr>\n<td>Total operating expense<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>348,000<\/td>\n<td class=\"r\">35.0%<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>290,000<\/td>\n<td class=\"r\">35.0%<\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"3\"><\/td>\n<\/tr>\n<tr>\n<td>Net income from operations<\/td>\n<td class=\"r\">$232,000<\/td>\n<td class=\"r\">23.3%<\/td>\n<td class=\"r\">$145,000<\/td>\n<td class=\"r\">17.5%<\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Other revenue and expenses<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 Gain on sale of investments<\/td>\n<td class=\"r\">$137,000<\/td>\n<td class=\"r\">13.8%<\/td>\n<td class=\"r\">$186,000<\/td>\n<td class=\"r\">22.5%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 Interest expense<\/td>\n<td class=\"r\">(55,000)<\/td>\n<td class=\"r\">5.5%<\/td>\n<td class=\"r\">(50,000)<\/td>\n<td class=\"r\">6.0%<\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td><\/td>\n<td class=\"line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td><\/td>\n<td class=\"line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>Income before income tax<\/td>\n<td class=\"r\">$314,000<\/td>\n<td class=\"r\">31.6%<\/td>\n<td class=\"r\">$281,000<\/td>\n<td class=\"r\">33.9%<\/td>\n<\/tr>\n<tr>\n<td>Income tax expense<\/td>\n<td class=\"r\">66,000<\/td>\n<td class=\"r\">6.6%<\/td>\n<td class=\"r\">50,000<\/td>\n<td class=\"r\">6.0%<\/td>\n<\/tr>\n<tr>\n<td>Net income<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$248,000 <span class=\"u-sr-only\">Double Line<\/span><\/td>\n<td class=\"r\">24.9%<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$231,000 <span class=\"u-sr-only\">Double Line<\/span><\/td>\n<td class=\"r\">27.9%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>On the comparative balance sheet, the amount of each line item is divided by total assets.<\/p>\n<table class=\"fin-table acctstatement\">\n<caption>Jonick Company<br \/>\nComparative Balance Sheet<br \/>\nDecember 31, 2019 and 2018<\/caption>\n<tbody>\n<tr>\n<th><\/th>\n<th scope=\"col\">2019<\/th>\n<th scope=\"col\">2019 (%)<\/th>\n<th scope=\"col\">2018<\/th>\n<th scope=\"col\">2018 (%)<\/th>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span style=\"text-transform: uppercase;\"><strong>Assets<\/strong><\/span><\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Current assets:<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Cash<\/td>\n<td class=\"r\">$373,000<\/td>\n<td class=\"r\">9.4%<\/td>\n<td class=\"r\">$331,000<\/td>\n<td class=\"r\">9.2%<\/td>\n<\/tr>\n<tr>\n<td>Marketable securities<\/td>\n<td class=\"r\">248,000<\/td>\n<td class=\"r\">6.3%<\/td>\n<td class=\"r\">215,000<\/td>\n<td class=\"r\">6.0%<\/td>\n<\/tr>\n<tr>\n<td>Accounts receivable<\/td>\n<td class=\"r\">108,000<\/td>\n<td class=\"r\">2.7%<\/td>\n<td class=\"r\">91,000<\/td>\n<td class=\"r\">2.5%<\/td>\n<\/tr>\n<tr>\n<td>Merchandise Inventory<\/td>\n<td class=\"r\">55,000<\/td>\n<td class=\"r\">1.4%<\/td>\n<td class=\"r\">48,000<\/td>\n<td class=\"r\">1.3%<\/td>\n<\/tr>\n<tr>\n<td>Prepaid insurance<\/td>\n<td class=\"r\">127,000<\/td>\n<td class=\"r\">3.2%<\/td>\n<td class=\"r\">115,000<\/td>\n<td class=\"r\">3.2%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 <strong>Total current assets<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$911,000<\/td>\n<td class=\"r\">23.1%<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$800,000<\/td>\n<td class=\"r\">22.2%<\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Long-term investments:<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Investment in equity securities<\/td>\n<td class=\"r\">$1,946,000<\/td>\n<td class=\"r\">49.3%<\/td>\n<td class=\"r\">$1,822,000<\/td>\n<td class=\"r\">50.5%<\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Property, plant and equipment:<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Equipment (net of accumulated depreciation)<\/td>\n<td class=\"r\">$87,000<\/td>\n<td class=\"r\">2.2%<\/td>\n<td class=\"r\">$42,000<\/td>\n<td class=\"r\">1.2%<\/td>\n<\/tr>\n<tr>\n<td>Building (net of accumulated depreciation)<\/td>\n<td class=\"r\">645,000<\/td>\n<td class=\"r\">16.3%<\/td>\n<td class=\"r\">581,000<\/td>\n<td class=\"r\">16.1%<\/td>\n<\/tr>\n<tr>\n<td>Land<\/td>\n<td class=\"r\">361,000<\/td>\n<td class=\"r\">9.1%<\/td>\n<td class=\"r\">361,000<\/td>\n<td class=\"r\">10.0%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 <strong>Total property, plant and equipment<\/strong><\/td>\n<td class=\"r\">$1,093,000<\/td>\n<td class=\"r\">27.7%<\/td>\n<td class=\"r\">$984,000<\/td>\n<td class=\"r\">27.3%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0<strong>Total assets<\/strong><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$3,950,000<span class=\"u-sr-only\">Double Line<\/span><\/td>\n<td class=\"r\">100.00%<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$3,606,000<span class=\"u-sr-only\">Double Line<\/span><\/td>\n<td class=\"r\">100.00%<\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span style=\"text-transform: uppercase;\"><strong>Liabilities<\/strong><\/span><\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Current liabilities:<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Accounts payable<\/td>\n<td class=\"r\">$120,000<\/td>\n<td class=\"r\">3.0%<\/td>\n<td class=\"r\">$109,000<\/td>\n<td class=\"r\">3.0%<\/td>\n<\/tr>\n<tr>\n<td>Salaries payable<\/td>\n<td class=\"r\">244,000<\/td>\n<td class=\"r\">6.2%<\/td>\n<td class=\"r\">222,000<\/td>\n<td class=\"r\">6.2%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 <strong>Total current liabilities<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$364,000<\/td>\n<td class=\"r\">9.2%<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$331,000<\/td>\n<td class=\"r\">9.2%<\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Long-term liabilities<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Mortgage note payable<\/td>\n<td class=\"r\">$83,000<\/td>\n<td class=\"r\">2.1%<\/td>\n<td class=\"r\">$83,000<\/td>\n<td class=\"r\">2.3%<\/td>\n<\/tr>\n<tr>\n<td>Bonds payable<\/td>\n<td class=\"r\">828,000<\/td>\n<td class=\"r\">21.0%<\/td>\n<td class=\"r\">745,000<\/td>\n<td class=\"r\">20.7%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 <strong>Total long-term liabilities<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$911,000<\/td>\n<td class=\"r\">23.1%<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$828,000<\/td>\n<td class=\"r\">23.0%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0<strong>Total liabilities<\/strong><\/td>\n<td class=\"r line-double\">$1,275,000<span class=\"u-sr-only\">Double Line<\/span><\/td>\n<td class=\"r\">32.3%<\/td>\n<td class=\"r line-double\">$1,159,000<span class=\"u-sr-only\">Double Line<\/span><\/td>\n<td class=\"r\">32.1%<\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<td colspan=\"5\"><span style=\"text-transform: uppercase;\"><strong>Stockholders&#8217; Equity<\/strong><\/span><\/td>\n<\/tr>\n<tr>\n<td>Preferred $1.50 stock, $20 par<\/td>\n<td class=\"r\">$166,000<\/td>\n<td class=\"r\">2.1%<\/td>\n<td class=\"r\">$166,000<\/td>\n<td class=\"r\">2.3%<\/td>\n<\/tr>\n<tr>\n<td>Common stock, $10 par<\/td>\n<td class=\"r\">83,000<\/td>\n<td class=\"r\">4.2%<\/td>\n<td class=\"r\">83,000<\/td>\n<td class=\"r\">4.6%<\/td>\n<\/tr>\n<tr>\n<td>Retained earnings<\/td>\n<td class=\"r\">2,426,000<\/td>\n<td class=\"r\">61.4%<\/td>\n<td class=\"r\">2,198,000<\/td>\n<td class=\"r\">61.0%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 <strong>Total stockholders&#8217; equity<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$2,675,000<\/td>\n<td class=\"r\">67.7%<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$2,447,000<\/td>\n<td class=\"r\">67.9%<\/td>\n<\/tr>\n<tr>\n<td><strong>Total liabilities and stockholders&#8217; equity<\/strong><\/td>\n<td class=\"r line-double\">$3,950,000<span class=\"u-sr-only\">Double Line<\/span><\/td>\n<td class=\"r\">100.00%<\/td>\n<td class=\"r line-double\">$3,606,000<span class=\"u-sr-only\">Double Line<\/span><\/td>\n<td class=\"r\">100.00%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>On both financial statements, percentages are presented for two consecutive years in order for the percent changes over time to be evaluated.<\/p>\n<h2>Intercompany Analysis<\/h2>\n<p>The use of percentages converts a company\u2019s dollar amounts on its financial statements into values that can be compared to other companies whose dollar amounts may be different.<\/p>\n<p>Common-size statements include only the percentages that appear in either a horizontal or vertical analysis. They often are used to compare one company to another or to compare a company to other standards, such as industry averages.<\/p>\n<p>The following compares the performance of two companies using a vertical analysis on their income statements for 2019.<\/p>\n<table class=\"fin-table acctstatement\">\n<caption>Jonick Company<br \/>\nComparative Income Statement<br \/>\nFor the Years Ended December 31, 2019<\/caption>\n<tbody>\n<tr>\n<th class=\"u-sr-only\" scope=\"col\">Description<\/th>\n<th scope=\"col\">Jonick<\/th>\n<th scope=\"col\">Schneider<\/th>\n<\/tr>\n<tr>\n<td>Sales<\/td>\n<td class=\"r\">100%<\/td>\n<td class=\"r\">100%<\/td>\n<\/tr>\n<tr>\n<td>Cost of merchandise sold<\/td>\n<td class=\"r\">41.6%<\/td>\n<td class=\"r\">47.5%<\/td>\n<\/tr>\n<tr>\n<td>Gross Profit<\/td>\n<td class=\"r\">58.4%<\/td>\n<td class=\"r\">52.5%<\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"3\"><\/td>\n<\/tr>\n<tr>\n<td>Total operating expense<\/td>\n<td class=\"r\">35.0%<\/td>\n<td class=\"r\">35.0%<\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"3\"><\/td>\n<\/tr>\n<tr>\n<td>Net income from operations<\/td>\n<td class=\"r\">23.3%<\/td>\n<td class=\"r\">17.5%<\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"3\"><\/td>\n<\/tr>\n<tr>\n<td colspan=\"3\"><span class=\"u-sr-only\">Subcategory, <\/span>Other revenue and expenses<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 Gain on sale of investments<\/td>\n<td class=\"r\">13.8%<\/td>\n<td class=\"r\">22.5%<\/td>\n<\/tr>\n<tr>\n<td>\u00a0 \u00a0 \u00a0 Interest expense<\/td>\n<td class=\"r\">5.5%<\/td>\n<td class=\"r\">6.0%<\/td>\n<\/tr>\n<tr aria-hidden=\"true\">\n<td colspan=\"3\"><\/td>\n<\/tr>\n<tr>\n<td>Income before income tax<\/td>\n<td class=\"r\">31.6%<\/td>\n<td class=\"r\">33.9%<\/td>\n<\/tr>\n<tr>\n<td>Income tax expense<\/td>\n<td class=\"r\">6.6%<\/td>\n<td class=\"r\">6.0%<\/td>\n<\/tr>\n<tr>\n<td>Net income<\/td>\n<td class=\"r\">24.9%<\/td>\n<td class=\"r\">27.9%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The common-size income statements for Jonick Corporation and Schneider Corporation show that Schneider has lower gross profit and net income from operations percentages to sales. Yet Schneider has a higher overall net income due to much greater gains on the sale of investments.<\/p>\n<p>From an investor\u2019s standpoint, Jonick is better at making money from operations. Schneider may or may not be able to sustain profits from sales of investments. Normally, if you were comparing retail or manufacturing companies, you would be more interested in profits from operations, since that is the core business function. This analysis might lead you back to more a horizontal analysis of Schneider and Jonick in order to determine why so much income is being generated from the sale of investments.<\/p>\n<p>Now, take what you&#8217;ve learned and practice your knowledge.<\/p>\n<section class=\"textbox tryIt\" aria-label=\"Try It\"><iframe loading=\"lazy\" id=\"ohm25263\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=25263&theme=lumen&iframe_resize_id=ohm25263&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n","protected":false},"author":6,"menu_order":27,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Vertical Analysis\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"Principles of Financial Accounting\",\"author\":\"Christine Jonick\",\"organization\":\"\",\"url\":\"https:\/\/web.ung.edu\/media\/university-press\/Principles-of-Financial-Accounting.pdf?t=1601063299615\",\"project\":\"\",\"license\":\"cc-by-sa\",\"license_terms\":\"\"}]","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"part":362,"module-header":"- Select Header -","content_attributions":[{"type":"original","description":"Vertical Analysis","author":"Joseph Cooke","organization":"Lumen Learning","url":"","project":"","license":"cc-by","license_terms":""},{"type":"cc","description":"Principles of Financial Accounting","author":"Christine Jonick","organization":"","url":"https:\/\/web.ung.edu\/media\/university-press\/Principles-of-Financial-Accounting.pdf?t=1601063299615","project":"","license":"cc-by-sa","license_terms":""}],"internal_book_links":[],"video_content":null,"cc_video_embed_content":{"cc_scripts":"","media_targets":[]},"try_it_collection":null,"_links":{"self":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/389"}],"collection":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/users\/6"}],"version-history":[{"count":3,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/389\/revisions"}],"predecessor-version":[{"id":930,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/389\/revisions\/930"}],"part":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/parts\/362"}],"metadata":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/389\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/media?parent=389"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=389"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/contributor?post=389"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/license?post=389"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}