Select the Correct Statement Regarding Vertical Analysis

question 83

Multiple Choice

Select the correct statement regarding vertical analysis.

• A)Vertical analysis of the income statement involves showing each item as a percentage of sales.
• B)Vertical analysis of the balance sheet involves showing each asset as a percentage of total assets.
• C)Vertical analysis examines two or more items from the financial statements of one accounting period.
• D)All of these answer choices are correct.

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Definitions:

Payback Method

An investment analysis method that calculates the time required to recoup the cost of an investment, based on the cash flow it generates.

Capital Cost Allowance (CCA)

The Canada Revenue Agency’s term for depreciation when calculating taxes.

Depreciation

The methodical distribution of the expense of a physical asset across its lifespan.

Projected NPV

The estimated Net Present Value of a project calculated using projected cash flows and a specific discount rate.