This essay focuses on liability and stockholders’ equity accounts. the composition of the assets. We noted in Example 13-1 that cash had decreased by 76%

liability and stockholders’ equity accounts

Similarly, all liability and stockholders’ equity accounts are state as a percentage of total liabilities and stockholders’ equity. The combination of the comparative balance sheets. It is  for the two years and the common-size feature allows the analyst. This is  to spot critical changes in the composition of the assets. We noted in Example 13-1 that cash had decreased by 76% over the two years.

The decrease of  cash from 9.8% of total assets to only 1.9% is highlighted here.The balance sheet displays the company’s total assets and how the assets are financed, either through either debt or equity.

You can also observe that

total current assets have continued to represent just under two-thirds (63.5%) of total assets. If cash has decreased significantly in terms. It is  of the percentage of total assets, what accounts have increased. This is  to maintain current assets at two-thirds of total assets? We can quickly determine from these data that although  inventory represented 19.9% of total assets at the end of 2016, the percentage is up to 28.1% at the end of 2017. This change in the relative composition of current assets between cash and inventory may signal that the company is having trouble selling inventory.
Total  current liabilities represent a slightly higher percentage of total liabilities and stockholders’ equity at the end of 2017 than at the end of 2016. The increase is balance by a slight decrease in the relative percentages of  long-term debt