Question

An analysis procedure that uses percentages to compare each of the parts of an individual statemtns to a key dollar amount from the financial statement is:
A) Contribution analysis.
B) Horizontal analysis.
C) Vertical analysis.
D) Ratio analysis.

Answer 1

Answer:

C) Vertical analysis.

Explanation:

Under the vertical analysis of financial statement, there is no a comparison with any past year performance as that is done in horizontal analysis.

Basically the first item that is sales revenue is marked as an 100% item, in this analysis, and all other cost items are shown as a percentage of this sales total value.

Everything shows the relation of sales value and that particular item. This helps in assessing which part of cost consumes the maximum revenue.