Question

question 8 (1 point) in vertical analysis, each item in a balance sheet is expressed as a percentage of question 8 options: a) net sales. b) total assets. c) net income. d) current assets. question 9 (1 point) in which of the following is net sales are represented by 100%? question 9 options: a) a horizontal analysis of a balance sheet b) a vertical analysis of a balance sheet c) a horizontal analysis of an income statement d) a vertical analysis of an income statement question 10 (1 point) preparing a vertical analysis is the best way to question 10 options: a) study the relationship between the components of a financial statement. b) measure the profitability or operating success of a company for a given period of time. c) evaluate a series of financial statement data over a period of time. d) measure a company's ability to meet both its long- and short-term financial obligations.

Answer 1

In vertical analysis of a balance sheet, items are expressed as a percentage of total assets. In vertical analysis of an income statement, net sales are represented at 100%. Preparing a vertical analysis is best for studying the relationship between financial statement components.

Step-by-step explanation:

Balance Sheet and Vertical Analysis:

When performing a vertical analysis of a balance sheet, each item is expressed as a percentage of total assets. This approach allows for a proportional analysis of the constituents of the financial statement, making it easier to spot individual elements relative to the total figure. Therefore, for question 8, the correct option is b) total assets.

Regarding question 9, in a vertical analysis of an income statement, net sales are represented as 100%, and the rest of the income statement items are expressed as a percentage of net sales. This allows analysts and stakeholders to assess the cost structure and profit margin related to sales. Consequently, the correct option for question 9 is d) a vertical analysis of an income statement.

For question 10, preparing a vertical analysis is best suited to study the relationship between the components of a financial statement. By comparing the percentage size of each line item to a total, significant insights can be obtained about the allocation and use of resources within the firm. Thus, the correct option for question 10 is a) study the relationship between the components of a financial statement.