Vertical Analysis

question 55

Multiple Choice

Vertical analysis:

• A)identifies the relative contribution made by each financial statement line item.
• B)identifies trends over time.
• C)provides an understanding of the relationships among various items on financial statements by expressing the differences in terms of dollars.
• D)involves comparing amounts across different financial statements.

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Definitions:

Net Days

This term signifies the number of days within which a payment is due after an invoice has been received.

Cash Conversion Cycle

A metric that expresses the time (days) it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Accounts Receivable

Money owed to a company by its clients or customers for goods or services that have been delivered but not yet paid for.

Inventory

The raw materials, work-in-process products, and finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.