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In vertical analysis: Question 2 options: financial statements are expressed only in percentages changes in a...

In vertical analysis:

Question 2 options:

financial statements are expressed only in percentages

changes in a company's operating results and financial position over time are expressed in percentages as well as dollars

net income is usually expressed as 100% and all other components of the income statement are expressed accordingly

monetary relationships between items on one period's financial statements are expressed in percentages as well as dollars
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Answer #1

Option (d) is correct

In vertical analysis, monetary relationships between items on one period's financial statements are expressed in percentages as well as dollars. In the income statement, net sales or revenue is taken as 100% and all other items are expressed based on the percentage of net sales. In the balance sheet, all the items are expressed as percentages of total assets or total liabilities.

Option (a) is incorrect as in vertical analysis, financial statements are expressed in dollars as well as percentages.

Option (b) is incorrect as changes in a company's operating results and financial position over time are expressed in percentages as well as dollars in case of horizontal analysis.

Option (c) is incorrect as it is not net income rather, net sales is usually expressed as 100% in income statement in vertical analysis.

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