All of the Following Statements Regarding Vertical Analysis Are True

question 196

Multiple Choice

All of the following statements regarding vertical analysis are true except

• A) vertical analysis may be prepared for several periods to analyze changes in relationships over time
• B) in a vertical analysis of a balance sheet, each asset item is stated as a percent of total assets
• C) in a vertical analysis of an income statement, each item is stated as a percent of total expenses
• D) major differences between a company's vertical analysis and industry averages should be investigated

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Definitions:

Dynamic

Characterized by constant change, activity, or progress within a system or environment.

Competitive Advantage

A state or condition that elevates a corporation to a more favorable or dominant position over its adversaries.

Organization Earn

The income generated by a business or entity from its operational and non-operational activities.

Legal-political Conditions

The framework of legal regulations and political factors that shape the operational environment of businesses and organizations.