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12 March, 04:07

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.

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Answers (2)
  1. 12 March, 06:15
    0
    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.
  2. 12 March, 07:28
    0
    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.
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