In vertical analysis:
A) a base amount is optional.
B) a base amount is required.
C) comparative statements are optional.
D) comparative statements are required.

Question

Quizplus · Accepted Answer

In vertical analysis, a base amount is required. This is because vertical analysis involves expressing each line item on a financial statement as a percentage of the base amount, which is usually total assets or sales revenue. Without a base amount, it is not possible to calculate the percentage for each line item. Comparative statements are optional, as vertical analysis can be done for a single period or multiple periods.

In Vertical Analysis