A firm has inventory of $46,500, accounts payable of $17,400, cash of $1,250, net fixed assets of $318,650, long-termdebt of $109,500, and accounts receivable of $16,600. What is the common-size percentage of the equity?

Common size percentage of equity =66.867%≈ 66.87%

Explanation:

Common size percentage is used to analyse balance sheet and income statements. It is calculated by dividing the parameter we are interested in by a base amount. For balance sheet the base amount is total asset.

In this case we are calculating common size percentage of equity.

Common size percentage of equity = Equity/Total Asset

Total asset= Cash + Inventory+ Fixed assets+ Accounts recievable

Total asset= 1,250+ 46,500+ 318,650+ 16,600

Total asset = $383,000

Total liabilities= long term debt + accounts payable

Total liabilities= 109,500+ 17,400

Total liabilities= $126,900

Using the accounting equation

Asset = Liabilities + Equity

Equity= Asset - Liabilities

Equity= 383,000- 126,900= $256,100

Therefore

Common size percentage of equity = Equity/Total Asset

CSPE= 256,100/383,000= 0.66867

CSPE= 66.867%

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