An analysis of a financial statement that reveals the relationship of each statement item to a specific base defines:
A)benchmarking.
B)horizontal analysis.
C)capital analysis.
D)vertical analysis.

Question

Quizplus · Accepted Answer

Vertical analysis, also known as common-size analysis, is a technique that involves analyzing a financial statement in which each item is expressed as a percentage of a specific base item, usually net sales or total assets. This allows for a better understanding of the relationship between different items on the statement and how they contribute to the overall financial picture of the company. Benchmarking involves comparing a company's performance to that of its competitors, while horizontal analysis involves analyzing changes in financial statement items over time. Capital analysis is a broader term that can refer to various techniques for evaluating a company's capital structure or financial position.

An Analysis of a Financial Statement That Reveals the Relationship