Asked by Katie McFarland on Jul 04, 2024
Verified
In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.
Vertical Analysis
A financial statement analysis method where each line item is listed as a percentage of a base figure within the statement, facilitating comparisons.
Current Liabilities
Current liabilities are financial obligations a company owes and is expected to pay within a year.
- Scrutinize financial statements by leveraging vertical analysis techniques, namely the preparation of common-sized financial statements.
Verified Answer
ME
Madestin Esther HedstromJul 10, 2024
Final Answer :
False
Explanation :
In the vertical analysis of a balance sheet, the base for current liabilities is total assets, not total liabilities. This method compares each line item to a base amount, which, in the case of the balance sheet, is typically total assets for all items.
Learning Objectives
- Scrutinize financial statements by leveraging vertical analysis techniques, namely the preparation of common-sized financial statements.
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