When using vertical analysis,we express balance sheet accounts as a percentage of
A)Sales.
B)Total assets.
C)Total liabilities.

Question

Quizplus · Accepted Answer

Vertical analysis is a tool that analyzes a company's financial statements by expressing each item in the statement as a percentage of a common base figure. In the case of the balance sheet, the common base figure is total assets, which represents the resources that the company has at its disposal. Therefore, balance sheet accounts are expressed as a percentage of total assets, which provides insight into the assets' contribution to the company's financial position. Therefore, the best choice is B (Total assets).

When Using Vertical Analysis,we Express Balance Sheet Accounts as a Percentage