An Expression of the Amount of Each Item in a Statement

question 101

Multiple Choice

An expression of the amount of each item in a statement shown as a percentage of some designated total for purposes of comparison is called:

• A) horizontal analysis.
• B) earnings per share analysis.
• C) return on total assets.
• D) vertical analysis.

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Definitions:

Acid-test Ratio

A financial metric that measures a company's ability to pay its current liabilities without relying on the sale of inventory.

Debt to Assets Ratio

A financial metric indicating the proportion of a company's assets financed through debt, used to assess financial leverage.

Profit Margin

A financial metric used to evaluate the profitability of a business, calculated by dividing net income by sales.

Operating Expenses

Costs associated with the day-to-day operations of a business, such as rent, utilities, and salaries, excluding the cost of goods sold.