A vertical analysis would be used if an analyst wants to see how gross profit of a company has changed from one year to the next.

Question

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A vertical analysis is used to compare different components of a company's financial statements as a percentage of a common base such as revenue or total assets. It is not used to compare changes in a specific item, such as gross profit, from one year to the next. A horizontal analysis, on the other hand, would be more appropriate for comparing changes over time.

A Vertical Analysis Would Be Used If an Analyst Wants