A vertical analysis of a balance sheet shows that current assets have increased from 42% to 56%.This means that:
A)current assets have increased as a percentage of total assets.
B)the dollar amount of total assets has increased.
C)the dollar amount of total assets has decreased.
D)the dollar amount of long-term assets has increased.

Question

Quizplus · Accepted Answer

A vertical analysis compares each line item of a financial statement to a base item, usually total assets or total revenue. In this case, the base item is total assets. The fact that current assets have increased from 42% to 56% means that they now make up a larger percentage of total assets. This does not tell us anything about the dollar amounts of total assets or long-term assets.

A Vertical Analysis of a Balance Sheet Shows That Current