Comparing operating expenses as a percentage of sales is an example of:
A)Vertical analysis.
B)Horizontal analysis.
C)Diagonal analysis.

Question

Quizplus · Accepted Answer

Comparing operating expenses as a percentage of sales is an example of vertical analysis. Vertical analysis is the analysis of financial statements where each line item on a statement is represented as a percentage of a base figure within the statement, such as sales or total assets. This helps to identify trends and patterns in the financial data and compare them to industry standards or prior periods. Horizontal analysis compares financial data from one period to another to identify changes or trends. Diagonal analysis is not a recognized term in financial analysis.

Comparing Operating Expenses as a Percentage of Sales Is an Example