Question

In the vertical analysis of a balance sheet, _____________ is assigned 100 percent, with all other items expressed as a percentage thereof

Answer 1

In the vertical analysis of a balance sheet, net sales are assigned 100 percent, with all other items expressed as a percentage thereof.

When analyzing the balance sheet vertically, assets are divided by the base amount, total assets. Debt and equity are divided by the sum of debt and equity, which is the base amount.

Vertical analysis is a means of measuring the relationship between any two different financial statement amounts, while horizontal analysis examines the relationship between specific financial statement measures.

The next red flag relates to the balance sheet. Open receivables from customers that are difficult or impossible to identify and correct. Mass sales to companies of unknown identity or ownership.

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