Final answer:
Vertical analysis is known as common size analysis and is used to represent financial statement entries as proportions of a total, enabling easy comparison across companies or time periods(option b).
Step-by-step explanation:
Vertical analysis, also known by answer choice B) common size analysis, is a method used in financial statement analysis where each entry for each of the three major categories of accounts (assets, liabilities and equity) in a balance sheet is represented as a proportion of the total account. This technique allows for easy comparison between companies of different sizes or comparison within a company over different periods by standardizing the financial statements. It should not be confused with horizontal analysis, which looks at amounts on the financial statements over a span of years to determine the increase or decrease within those accounts.
While vertical analysis is similarly used in conjunction with other methods to assess financial situations, it is not synonymous with options A) perpendicular analysis, C) trend analysis, or D) straight-line analysis. Trend analysis, for example, is a different technique that compares historical data over time to identify any consistent results or trends. Perpendicular or straight-line analyses are not recognized terms in financial statement analysis.