Which of the following financial statements is rarely the object of vertical analysis?
A) The income statement is rarely the object of vertical analysis.
B) The statement of cash flows is rarely the object of vertical analysis.
C) The balance sheet is rarely the object of vertical analysis.
D) All of the above statements are commonly the object of vertical analysis.

Question

Quizplus · Accepted Answer

Vertical analysis is commonly applied to the income statement and the balance sheet, where financial statement items are expressed as a percentage of a significant total (sales for the income statement and total assets or liabilities for the balance sheet). The statement of cash flows, however, is less frequently subjected to vertical analysis because it focuses on the inflows and outflows of cash over a period, making the technique less relevant or informative for this type of financial statement.

Which of the Following Financial Statements Is Rarely the Object