Question

In vertical analysis, each item in a balance sheet is expressed as a percentage of ________:

a) net income.
b) current assets.
c) total assets.
d) net sales.

Answer 1

In vertical analysis of a balance sheet, each item is expressed as a percentage of total assets, providing standardization for easier comparison across companies.

Step-by-step explanation:

In vertical analysis of a balance sheet, each item is expressed as a percentage of total assets. That is, for any given item on the balance sheet, you would calculate the percentage by dividing the value of that item by the value of total assets and then multiplying by 100. This method allows for an easier comparison of financial statements across different-sized companies by standardizing the figures. Therefore, the correct answer to the question is option c) total assets.