Which approach converts financial statement numbers as percentage of total assets or gross sales?
A)Horizontal Analysis
B)Vertical Analysis
C)Ratio Analysis
D)Variance Analysis

Question

Quizplus · Accepted Answer

Vertical Analysis, also known as common-size analysis, involves converting financial statement numbers as a percentage of a base amount, such as total assets or gross sales. This allows for easy comparison between the financial statements of different companies or different time periods for the same company. Horizontal Analysis involves comparing financial statement numbers across multiple time periods, Ratio Analysis involves calculating and analyzing financial ratios, and Variance Analysis involves analyzing and explaining the difference between actual and budgeted financial results.

Which Approach Converts Financial Statement Numbers as Percentage of Total