Which of the Following Is an Example of Vertical Analysis

question 107

Multiple Choice

Which of the following is an example of vertical analysis?

• A)Comparing gross profit across companies.
• B)Comparing income statement items as a percentage of sales.
• C)Comparing debt with industry averages.
• D)Comparing the change in sales over time.

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Definitions:

Accumulated Other Comprehensive Income

The cumulative effect of other comprehensive income items, which is reported separately in the “Stockholders’ equity” section of the balance sheet.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing the ownership interest of shareholders.

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period of time, leading to the net profit or loss for that period.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.