Question

Vertical analysis looks​ at: A. individual financial statement items expressed as a percentage of a base​...

Vertical analysis looks​ at:

A.

individual financial statement items expressed as a percentage of a base​ (which represents​ 100%)

B.

percentage changes in the balances shown in comparative financial statements

C.

the change in key financial statement ratios over a specified period of time

D.

the dollar amount of the change in various financial statement amounts from year to year

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A) individual financial statement items expressed as a percentage of a base​ (which represents​ 100%)

Vertical analysis looks at the financial statements of the current period in which financial items are expressed as a percentage of another components (Usually sales/Revenue ) . For example- expenses , income , profit etc are expressed as a percentage of total revenue.In case of balance sheet, total assets are the base representing 100 %.

C is incorrect as their is no ratio calculation involved. D and B are incorrect as the analysis focuses on expressing items as a percentage and does not measure any change .

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