An analysis in which all the components of an income statement are expressed as a percentage of net sales is called
A) vertical analysis
B) horizontal analysis
C) liquidity analysis
D) solvency analysis

Question

Quizplus · Accepted Answer

Vertical analysis is a technique of financial statement analysis in which each item on a financial statement is shown as a percentage of a base number within the statement. In the case of an income statement, the base number is typically net sales. This allows for the easy comparison of the percentages of different components of the income statement, and helps to identify any trends or changes over time.

An Analysis in Which All the Components of an Income