Which of the following types of analysis is useful in computing the relationships among the components of the financial statements for the same period?
A) Vertical analysis
B) Horizontal analysis
C) Operational analysis
D) Ratio analysis

Question

Quizplus · Accepted Answer

Vertical analysis is the process of comparing the financial statement items to a base item within the same period. It helps in determining the relationships among the components of the financial statements for the same period. On the other hand, horizontal analysis compares the financial statement items to the same item in the prior period, while operational analysis focuses on the operations of the company. Ratio analysis, on the other hand, uses financial ratios to determine the performance and financial health of the company. Therefore, the best choice for computing relationships among the components of the financial statements for the same period is vertical analysis.

Which of the Following Types of Analysis Is Useful in Computing