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:

Elon Musk

An entrepreneur and business magnate known for his involvement in SpaceX, Tesla, Inc., and several other high-tech ventures.

Normal Profit

The minimum amount of revenue that a company needs to cover both explicit and implicit costs.

Entrepreneurs

Individuals who, rather than working as employees, run a business and assume all the risks and rewards of a given business venture, idea, or good or service offered for sale.

Allocative Efficiency

A state of resource distribution where resources are allocated in a way that maximizes the total benefit received by all members of society.