If an analyst wishes to see how a company's net income as a percentage of net sales has changed from one year to the next, a vertical analysis would be the most appropriate approach.

Question

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Vertical analysis is a technique used in financial analysis to assess the relationship between different items in the financial statements. By expressing each line item as a percentage of a base figure, such as net sales, an analyst can compare how different items have changed over time. Therefore, if an analyst wishes to see how a company's net income as a percentage of net sales has changed from one year to the next, a vertical analysis would be the most appropriate approach.

If an Analyst Wishes to See How a Company's Net