The vertical analysis approach that will provide the most effective performance evaluation of James Jeans Co. and its two largest competitors is Option B.
A vertical analysis is a financial statement analysis with each line item listed as a percentage of the base figure from the financial statement.
For example, the vertical analysis calculates the balance sheet percentage by dividing each asset line item by the total assets.
A. Review the stock price performance of the three companies over the last several years and the Wall Street Analyst buy/sell recommendations: compare debt ratings: review messages on key business websites and blogs to learn what is being said about the company and competitors.
B. Calculate cost of goods sold, selling and administrative expenses, and net income as a percentage of net sales for James Jeans and the two largest competitors; draw conclusions from these results and highlight similarities and differences.
C. Identify the structure of the sales and marketing team of each company, gather information about customer product reviews, and review product warranty claims to understand the comparative performance.
D. Analyze the size of each company's balance sheet and income statement accounts by calculating how much larger or smaller the competitors are compared to James Jeans Co. summarize observations about what might be the reasons for these size differences.
Thus, the vertical analysis approach that will provide the most effective performance evaluation of James Jeans Co. and its two largest competitors is Option B.
"Calculate the cost of goods sold, selling and administrative expenses, and net income as a percentage of net sales for James Jeans and the two largest competitors; draw conclusions from these results and highlight similarities and differences."
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