The relationship of each asset item as a percent of total assets is an example of vertical analysis.

Question

Quizplus · Accepted Answer

Vertical analysis involves expressing each line item on the financial statement as a percentage of a base amount, typically total assets for the balance sheet and net sales for the income statement. This allows for a comparison of the relative proportion of each item in relation to the whole statement.

The Relationship of Each Asset Item as a Percent of Total