Final answer:
Vertical analysis is indeed synonymous with 'common sizing' of financial statements, which is a method where statement items are expressed as a percentage of a significant total, making it an accurate and standardized approach to financial analysis.
Step-by-step explanation:
The statement that vertical analysis is also known as "common sizing" of financial statements is true. Vertical analysis, or common size analysis, is a method of financial statement analysis in which each item on a particular statement is listed as a percentage of another item. Typically, this involves expressing each item as a percentage of sales on the income statement or as a percentage of total assets or total liabilities on the balance sheet. This technique allows for easy comparisons between companies of different sizes or for tracking changes within a company over time.
Unlike the analytical method mentioned, which refers to using computations and formulas, vertical analysis is all about simplifying financial data by standardizing it. When comparing vertical analysis to graphical methods, the precision of vertical analysis is not limited by drawing or visualization inaccuracies, making it a more accurate method for financial analysis.