A primary purpose of vertical analysis is to observe trends over a three-year period.

Question

Quizplus · Accepted Answer

The primary purpose of vertical analysis is to compare different components of a company's financial statements within the same year, in order to analyze the relative proportions of those components. While this analysis can be helpful in identifying trends over a longer time period, such as three years, that is not its primary purpose.

A Primary Purpose of Vertical Analysis Is to Observe Trends