Which of the following statements is true regarding vertical analysis?
A)Cross-sectional analysis compares financial data for a single entity over time.
B)Common size financial statements are used to compare companies of different sizes.
C)Trend analysis compares a company's financial data to industry averages.
D)Time series analysis is effective for comparison of different companies over time.

Question

Quizplus · Accepted Answer

Vertical analysis, also known as common size financial analysis, is a method used to compare financial statements of companies of different sizes by expressing each line item as a percentage of a base amount, thereby facilitating comparisons.

Which of the Following Statements Is True Regarding Vertical Analysis