Which of the Following Is the Definition of Vertical Analysis

question 62

Multiple Choice

Which of the following is the definition of vertical analysis?

• A) Vertical analysis is the practice of comparing a company with other companies that are leaders.
• B) Vertical analysis is the analysis in which percentages are computed by selecting a base year as 100% and expressing amounts for following years as a percentage of the base amount.
• C) Vertical analysis is the study of percentage changes in comparative financial statements.
• D) Vertical analysis is the analysis of a financial statement that reveals the relationship of each statement item to a specified base, which is the 100% figure.

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Definitions:

Outlier

An outlier is an observation in a data set that is distant from other observations, often indicating variability in measurement or a potential error.

Categorical Variable

A type of variable that can take on one of a limited, and usually fixed, number of possible values, assigning each individual or other unit of analysis to a particular group or nominal category.

Cubed-Root Transformation

A statistical technique used to stabilize variance, make the data more closely conform to a normal distribution, or improve the interpretability of data with skewed distributions.

Log Transformation

A mathematical operation that replaces a variable with the logarithm of that variable to help normalize data or manage skewed distributions.