Perform vertical analysis to correct a cash shortage
Response to the following problem:
Robbles Software reported the following amounts on its balance sheets at December 31, 2014, 2013, and 2012:
|
|
2014
|
2013
|
2012
|
|
Cash.
|
$19,200
|
$ 13,600
|
$ 11,340
|
|
Receivables, net.........................
|
34,700
|
20,800
|
23,900
|
|
Inventory.......................................
|
266,800
|
197,600
|
148,180
|
|
Prepaid expenses......................
|
34,900
|
41,600
|
33,460
|
|
Property, plant, and equipment, net....................
|
220,400
|
244,400
|
258,120
|
|
Total assets ........................
|
$576,000
|
$518,000
|
$475,000
|
Sales and profits are high. Nevertheless, Robbles is experiencing a cash shortage. Perform a vertical analysis of Robbles Software's assets at the end of years 2014, 2013, and 2012. Use the analysis to explain the reason for the cash shortage.