Vertical Analysis Is a Technique That Expresses Each Item in a Financial

question 200

Multiple Choice

Vertical analysis is a technique that expresses each item in a financial statement

• A) in dollars and cents.
• B) as a percent of the item in the previous year.
• C) as a percent of a base amount.
• D) starting with the highest value down to the lowest value.

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Definitions:

Rule of 72

A mathematical rule to estimate the number of years required to double an investment at a given annual fixed interest rate.

$10,000

A numerical figure representing a specific amount of money, notable in various financial contexts.

Cash Flows

signify the net amount of cash being transferred into and out of a business, crucial for assessing liquidity, flexibility, and overall financial health.

Net Present Value

A financial metric that calculates the value of a series of cash flows by discounting them to their present value, used to assess the profitability of investments.