After generating financial statements for your client, Doug, you list each line item on the income statement as apercentage of total income and each item on the balance sheet as a percentage of total assets. Which comparative financial statement tool are you utilizing?
a.Monte Carlo Analysis.
b.Horizontal Analysis.
c.Vertical Analysis.
d.Sensitivity Analysis.

Respuesta :

Answer:

c.Vertical Analysis.

Explanation:

Vertical analysis is a proportional analysis used in financial statements. Each line item is represented as a percentage of another item on the financial statement.

On income statement items are usually represented as a percentage of income or gross sales.

On the balance sheet line items are represented as a percentage of total assets.

Answer:

The correct answer is letter "C": Vertical Analysis.

Explanation:

Under Vertical Analysis each line item is viewed as a percentage of a larger number in a company's financial statement. On the Balance Sheet, each line item in the Asset section is presented as a percentage of total assets. In the Liability and equity section, each line item is presented as a percentage of total liabilities and equity which equals total assets based on the accounting equation.