Which of the following terms is defined as an analysis of a financial statement that reveals the relationship of each statement item to a specific base?
A)Benchmarking
B)Horizontal analysis
C)Vertical analysis
D)Capital analysis

Question

Quizplus · Accepted Answer

Vertical analysis, also known as common-size analysis, involves expressing each line item of a financial statement as a percentage of a specific base, typically total assets or total liabilities and equity. This allows for a comparison of the relative proportions of each line item and can highlight areas of concern or strength in a company's financial position. Benchmarking refers to comparing a company's performance to industry standards or competitors, horizontal analysis involves comparing financial data over time, and capital analysis typically refers to an evaluation of a company's capital structure and financing decisions.

Which of the Following Terms Is Defined as an Analysis