Which of the following types of analysis allows for the comparison of financial statement items between companies of different size?
A)Horizontal approach
B)Vertical approach
C)Diagonal approach

Question

Quizplus · Accepted Answer

The vertical approach analyzes financial statement items as a percentage of a key statement component, such as total assets or net sales. This allows for the comparison of companies of different size, as the percentages normalize the data. The horizontal approach compares financial statement items within the same company from one period to the next, and the diagonal approach is not a commonly used type of financial statement analysis.

Which of the Following Types of Analysis Allows for the Comparison