Quiz on FS Analysis (May 5-8, 2025)

Which of these statements is FALSE?

• Horizontal analysis can show peso and percentage changes over time.

• Vertical analysis shows each item as a percentage of a base item.

• Trend analysis uses a base year as 100%.

• A company comparison should not be made with industry averages if the company does not clearly fit into any one industry

The percent of property, plant and equipment to total assets is an example of:

• vertical analysis

• horizontal analysis

• ratio analysis

• liquidity analysis

The percentage analysis of increases and decreases in individual items in comparative financial statements is called:

• vertical analysis

• trend analysis

• ratio analysis

• horizontal analysis

In performing a vertical analysis, the base for prepaid expenses is

• total current assets.

• total liabilities.

• total assets.

• prepaid expenses in the previous year.

In performing a vertical analysis, the base for cost of goods sold is

• Total sales revenue

• Gross profit

• Net income

• Average sales

In performing a horizontal analysis, the base amount is:

• This year’s balance

• Last year’s balance

• Difference of this year and last year’s balances

• Average of this year and last year’s balances

The following can be used as a base amount in performing a vertical analysis EXCEPT:

• Total liabilities and equity

• Sales revenue

• Total assets

• Net income

In performing a trend analysis, the base year is always?

• <100%

• >100%

• 100%

• 0

Statements in which all items are expressed only in relative terms (percentages of a base) are termed:

• Financial Statements

• Vertical Statements

• Horizontal Statements

• Common-Size Statements

In performing a vertical analysis, the base for unearned revenue is

• total assets

• total liabilities

• total revenue

• net income