Which of the following is an example of vertical analysis?
A)Comparing gross profit across companies.
B)Comparing income statement items as a percentage of sales.
C)Comparing debt with industry averages.
D)Comparing the change in sales over time.

Question

Quizplus · Accepted Answer

Vertical analysis involves comparing items on an income statement or balance sheet as a percentage of a common base, such as net sales or total assets. Option B describes exactly that practice. Options A, C, and D do not involve vertical analysis as they do not compare items as a percentage of a common base.

Which of the Following Is an Example of Vertical Analysis