Which of the following is not true of vertical analysis?
A)Each item on the balance sheet is expressed as a percentage of total liabilities.
B)The percentages can be added and subtracted from top to bottom.
C)Each item in the income statement is expressed as a percentage of net sales.
D)Each item on the balance sheet is expressed as a percentage of total assets.

Question

Quizplus · Accepted Answer

Vertical analysis involves expressing each item on a financial statement as a percentage of a base amount. For the balance sheet, this is usually total assets, not total liabilities. Therefore, Choice A is not true.

Which of the Following Is Not True of Vertical Analysis