Which of the following is true concerning vertical analysis?
A)It is a technique for evaluating a series of financial statement data over a period of time.
B)It is used to determine the increase or decrease that has taken place over a period of time.
C)It is expressed as a percentage of the base year amount of the same account.
D)It is also called common size analysis.

Question

Quizplus · Accepted Answer

Vertical analysis, also known as common size analysis, expresses each line item on a financial statement as a percentage of a base amount (usually total assets for the balance sheet and net sales for the income statement). It helps to identify trends and changes in financial data within a single period. A and B describe trend analysis, while C describes horizontal analysis.

Which of the Following Is True Concerning Vertical Analysis