The ratio of the dollar amount of each individual asset to the dollar amount of total assets is an example of vertical analysis.

Question

Quizplus · Accepted Answer

This statement is true. Vertical analysis involves the comparison of individual line items or accounts to the total amount of assets, liabilities, or equity in a financial statement. This helps to determine the proportion or percentage of each component relative to the whole, providing insights into the company's financial health and performance. The resulting figures are often presented in the form of vertical or common-size financial statements, which reflect the relative size and importance of each item in the context of the overall financial picture.

The Ratio of the Dollar Amount of Each Individual Asset