Question

Which of the following are the tools of vertical analysis? (i) Ratio Analysis (ii) Comparative Statements (iii) Common Size Statement
(a) Only (iii)
(b) Both (i) and (iii)
(c) Both (i) and (ii)
(d) Only (i)​

Answer 1

Answer:

option (d) Only (i)

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Answer 2

The tools of vertical analysis are Both (i) and (iii)

Explanation:

Ratio Analysis:

• Financial statement line-item data is examined using ratio analysis to determine a company's profitability, liquidity, operational efficiency, and solvency.
• Ratio analysis is a method of comparing a company's performance over time to that of other companies in the same industry or sector.

Common Size Statement:

• Each line item on an income statement with a common size is expressed as a percentage of the revenue or sales value.
• Financial statements of a standard size are helpful for analyzing and comparing a company's performance across time and with various sales figures.