Vertical Analysisevaluates a single year's financial statements by expressing each line item as a percentage of a base amount. For example, in an income statement, each expense may be presented as a percentage of total revenue.
This approach helps users understand the relative size of each financial statement item within the context of the total.
Why Is Vertical Analysis Used for a Single Year?
Vertical analysis focuses solely on relationships within a single set of financial statements, making it the appropriate choice for single-year evaluations.
Why Other Options Are Incorrect:
A. Comparative:Involves comparing financial data across entities or periods, not within a single year.
B. Horizontal:Focuses on changes in financial data over time (year-to-year comparisons).
C. Trend:Examines patterns over multiple periods to identify long-term trends, not a single year.
Chosen Answer:
This is a voting comment (?). You can switch to a simple comment. It is better to Upvote an existing comment if you don't have anything to add.
Submit