When each asset is analyzed as a percent of total assets for a single period, this is known as:
A)Horizontal analysis
B)Comparative analysis
C)Ratio analysis
D)Vertical analysis
E)None of these

Question

Quizplus · Accepted Answer

Vertical analysis, also known as common-size analysis, is a method of financial statement analysis in which each item of a financial statement is expressed as a percentage of a base amount. In this case, each asset is being analyzed as a percentage of total assets, making it vertical analysis. Horizontal analysis compares changes in financial information over time, comparative analysis compares similar entities, and ratio analysis examines the relationships between different financial statement items.

When Each Asset Is Analyzed as a Percent of Total