Which of the Following Statements Is True Regarding Vertical Analysis

question 188

Multiple Choice

Which of the following statements is true regarding vertical analysis?

• A)Cross-sectional analysis compares financial data for a single entity over time.
• B)Common size financial statements are used to compare companies of different sizes.
• C)Trend analysis compares a company's financial data to industry averages.
• D)Time series analysis is effective for comparison of different companies over time.

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Definitions:

Per Unit

A term that describes costs or revenues on a single unit basis.

Variable Costs

Expenses that directly fluctuate in proportion to the production or service activity level.

Activity

Any action or operation within a business or process.

Committed Fixed Costs

Long-term fixed costs that an organization has committed to, which are not easily changed, such as lease payments or insurance costs.