An example of vertical analysis is
A)common-size statements.
B)trend analysis.
C)ratio analysis.
D)profitability analysis.

Question

Quizplus · Accepted Answer

Vertical analysis, also known as common-size analysis, involves expressing each line item on a company's financial statement as a percentage of a particular base number, such as total assets or revenue. This allows for easy comparison of the relative proportion of each item to the whole and helps identify trends in the company's financial performance over time. Therefore, A) common-size statements is the best choice for an example of vertical analysis. B) Trend analysis involves comparing data over multiple periods to identify patterns, while C) ratio analysis involves comparing different financial ratios to evaluate a company's financial health. D) Profitability analysis typically involves analyzing a company's net income and profit margins. While these methods may involve vertical analysis to some extent, they are not solely focused on it as A) is.

An Example of Vertical Analysis Is