All of the following statements about vertical analysis are true except
A)vertical analysis is also called common size analysis.
B)amounts on the statement of income are expressed as a percentage of sales.
C)vertical analysis shows the relative size of each item in the statement of financial position.
D)vertical analysis is also called trend analysis.

Question

Quizplus · Accepted Answer

Vertical analysis is not the same as trend analysis. Vertical analysis, or common size analysis, involves expressing each item on a financial statement as a percentage of a base amount (e.g., sales for the income statement or total assets for the balance sheet), to allow for comparison across companies or periods. Trend analysis, on the other hand, involves comparing the same item or financial ratio over multiple periods to identify patterns or trends.

All of the Following Statements About Vertical Analysis Are True