What can we find out by conducting the Vertical Analysis of the Income Statement
ID: 2816502 • Letter: W
Question
What can we find out by conducting the Vertical Analysis of the Income Statement? 1. We can find out whether individual expenses are growing per unit sales over time. 2. We can find out whether the amounts of individual expenses are growing over time. 3. We can find out how fast revenues are growing over time. 4. We can find out growth rate of net profit of each year against the previous year.Which of the following describes the Retained Earnings most appropriately? 1. It is the amount of the currently year's Net Profit before taking out dividends. 2. It is the net of the current year's Net Profit after taking out dividends. 3. It is the accumulated amount of Net Profits of the company. Net Losses are not included in this amount. For this reason, it cannot become negative. 4. It is the accumulated amount of Net Profits or Net Losses of the business. Because Net Losses are also included, the amount of Retained Earnings may become negative. What can we find out by conducting the Vertical Analysis of the Income Statement? 1. We can find out whether individual expenses are growing per unit sales over time. 2. We can find out whether the amounts of individual expenses are growing over time. 3. We can find out how fast revenues are growing over time. 4. We can find out growth rate of net profit of each year against the previous year.
Which of the following describes the Retained Earnings most appropriately? 1. It is the amount of the currently year's Net Profit before taking out dividends. 2. It is the net of the current year's Net Profit after taking out dividends. 3. It is the accumulated amount of Net Profits of the company. Net Losses are not included in this amount. For this reason, it cannot become negative. 4. It is the accumulated amount of Net Profits or Net Losses of the business. Because Net Losses are also included, the amount of Retained Earnings may become negative. What can we find out by conducting the Vertical Analysis of the Income Statement? 1. We can find out whether individual expenses are growing per unit sales over time. 2. We can find out whether the amounts of individual expenses are growing over time. 3. We can find out how fast revenues are growing over time. 4. We can find out growth rate of net profit of each year against the previous year.
Which of the following describes the Retained Earnings most appropriately? 1. It is the amount of the currently year's Net Profit before taking out dividends. 2. It is the net of the current year's Net Profit after taking out dividends. 3. It is the accumulated amount of Net Profits of the company. Net Losses are not included in this amount. For this reason, it cannot become negative. 4. It is the accumulated amount of Net Profits or Net Losses of the business. Because Net Losses are also included, the amount of Retained Earnings may become negative. Which of the following describes the Retained Earnings most appropriately? 1. It is the amount of the currently year's Net Profit before taking out dividends. 2. It is the net of the current year's Net Profit after taking out dividends. 3. It is the accumulated amount of Net Profits of the company. Net Losses are not included in this amount. For this reason, it cannot become negative. 4. It is the accumulated amount of Net Profits or Net Losses of the business. Because Net Losses are also included, the amount of Retained Earnings may become negative.
Explanation / Answer
Answer A. Option 4 is correct: Vertical Analysis of the income statement gives rowth rate of net profit of each year against the previous year. It compares current year results with that of previous years and each figure can be compared with respect to previous to find out the growth.
Answer 2. Option 4 is correct: Retained earnings is the accumulated amount of Net Profits or Net Losses of the business. Because Net Losses are also included, the amount of Retained Earnings may become negative.