Financial analysts would often perform vertical analysis of the:
A) income statement
B) statement of owner's equity
C) cash flow statement
D) company's financial ratios

Question

Quizplus · Accepted Answer

Vertical analysis is a technique used to evaluate financial statements by expressing each item as a percentage of a base amount. The income statement is the primary financial statement used to measure a company's profitability, making it the logical choice for vertical analysis. The statement of owner's equity is used to calculate changes in equity and does not provide as much insight into a company's financial health as the income statement does. The cash flow statement indicates how cash is being generated and used in a company, but it does not provide as much information about profitability as the income statement. Financial ratios are calculated using information from the financial statements and do not involve vertical analysis of the statements themselves.

Financial Analysts Would Often Perform Vertical Analysis of The