The comparison of a company's financial condition and performance to a base amount is known as:
A) Financial reporting.
B) Horizontal ratios.
C) Investment analysis.
D) Risk analysis.
E) Vertical analysis.

Question

Quizplus · Accepted Answer

The comparison of a company's financial condition and performance to a base amount is known as vertical analysis, also called common-size financial statements. It involves expressing each line item on a financial statement as a percentage of a common base, such as total assets or net sales. This allows for a more meaningful comparison between companies of different sizes or industries.

The Comparison of a Company's Financial Condition and Performance to a Base