Which of the following statement on vertical analysis is false?a. For the Statement of Financial Position the divisor is Total Liabilitiesb. For the Statement of Comprehensive Income the divisor is Net Sales(Revenue)c. For the Cash Flow Statement the divisor is the total cash inflows

FINANCIAL MANAGEMENT

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	a
B	b
C	c
D	a and b

Explanation:

Detailed explanation-1: -Vertical analysis allows the comparison between financial ratios over a certain time period. this statement is not correct because the horizontal analysis is the one responsible for ratio analysis and not the vertical analysis.

Detailed explanation-2: -Vertical Analysis refers to the income statement analysis where all the line items present in the company’s income statement are listed as a percentage of the sales within such a statement. It thus helps analyze the company’s performance by highlighting whether it is showing an upward or downward trend.

Detailed explanation-3: -Vertical analysis is a method of financial statement analysis in which each line item is listed as a percentage of a base figure within the statement.

Detailed explanation-4: -What is vertical analysis? Vertical analysis is a method of analyzing financial statements that list each line item as a percentage of a base figure within the statement. The first line of the statement always shows the base figure at 100%, with each following line item representing a percentage of the whole.

There is 1 question to complete.

BUISENESS MANAGEMENT

FINANCIAL MANAGEMENT