A financial statement line item expressed as a percentage of a base amount is a result of:
A)horizontal analysis.
B)economic value added.
C)vertical analysis.
D)comparative analysis.

Question

Quizplus · Accepted Answer

This is a characteristic of vertical analysis, which presents financial statement line items as a percentage of a base amount (usually total assets for the balance sheet and total revenue for the income statement). Horizontal analysis involves comparing financial statement line items over time (such as year-over-year or quarter-over-quarter) and expressing the change as a percentage. Economic value added (EVA) is a financial performance metric that measures a company's true economic profit after accounting for the cost of capital. Comparative analysis involves comparing financial information across different companies or industries.

A Financial Statement Line Item Expressed as a Percentage of a Base