Question

Vertical analysis is a technique that expresses each item in a financial statement A. as a percent of the item in the previous year. B. in dollars and cents. C. starting with the highest value down to the lowest value. D. as a percent of a base amount.

Answer 1

Answer:

D.

Explanation:

The vertical analisys shows the different components of a finalcial statement related to a total figure in the statement.

Expresses each financial statement item as a percent of a base amount.

Commonly applied to the balance sheet and the income statement. On the balance sheet, set total assets to 100. On the income statement, set net sales to 100. The resulting statement, expressed entirely in percentages is called a common-size statement.

The total figure in the statement set to equal to 100. Each component´s percentage of that total is computed.

Usefull for comparing. The important of specific components in the operation of a business. Changes in the components from one year to the next.