Benchmarking financial statements represents a form of:
A) horizontal analysis.
B) vertical analysis.
C) gross profit analysis.
D) trend analysis.

Question

Quizplus · Accepted Answer

Benchmarking financial statements involves comparing a company's financial performance to that of its competitors or industry averages, which is a form of vertical analysis. Vertical analysis involves expressing each item in a financial statement as a percentage of a base item, usually revenue or net sales. This allows for easy comparison of financial statements across time or with other companies. Horizontal analysis looks at changes in financial statements over time, gross profit analysis focuses specifically on a company's gross profit margin, and trend analysis examines data over a longer period of time to identify patterns or trends.

Benchmarking Financial Statements Represents a Form Of