Which of the following is the base amount when performing vertical analysis of a balance sheet?
A) Total assets
B) Total cash and cash equivalents
C) Net income
D) Gross profit

Question

Quizplus · Accepted Answer

The base amount when performing vertical analysis of a balance sheet is typically the total assets. This allows for a comparison of each individual asset as a percentage of the total assets, providing insight into the composition and liquidity of the company's balance sheet. Choice B (total cash and cash equivalents) would be too narrow of a base amount, while choices C (net income) and D (gross profit) are not balance sheet items and therefore not suitable for vertical analysis of a balance sheet.

Which of the Following Is the Base Amount When Performing