Comparing operating expenses as a percentage of sales is an example of:
A)Vertical analysis.
B)Horizontal analysis.
C)Diagonal analysis.
D)Both vertical and horizontal analysis.

Question

Quizplus · Accepted Answer

Comparing operating expenses as a percentage of sales is an example of vertical analysis which involves comparing different items of a company's financial statements to a common base such as sales or total assets. It helps to understand the composition and proportion of expenses relative to sales. Horizontal analysis compares data over different periods, and diagonal analysis is not a commonly used term in financial analysis.

Comparing Operating Expenses as a Percentage of Sales Is an Example