Vertical analysis is also known as
A) perpendicular analysis.
B) common size analysis.
C) trend analysis.
D) straight-line analysis.

Question

Quizplus · Accepted Answer

Vertical analysis is also referred to as common size analysis, as it involves comparing the relative proportions of individual line items to a base figure in the financial statements, typically the total revenue or total assets. This allows for meaningful comparisons between different companies or between different periods for the same company. The other options listed, such as perpendicular analysis or straight-line analysis, are not accurate synonyms or alternate names for vertical analysis. Trend analysis is a separate method of financial analysis that involves examining changes in ratios or line items over several accounting periods to detect patterns or trends.

Vertical Analysis Is Also Known as