Question

This statement: Accounts receivable on ABC Company's at Dec. 31, 2019 represents 25 % of the Company's total assets is an example of what type of analysis?

A) Vertical Analysis.
B) Horizontal Analysis.
C) Ratio Analysis.
D) None of the above.

Answer 1

Answer: A) Vertical Analysis.

Step-by-step explanation:

Vertical Analysis is a method used to analyse the financial statement and it works by converting every entry in a statement to a percentage of the base figure in the statement.

In the Balance Sheet, the base figure will be the total amount of Assets so when any other entry is made a percentage of assets such as was done to the Accounts Receivables of ABC company, this is a Vertical Analysis.