Reporting an amount on a financial statement as a percentage of another item on the same financial statement is called:________.

Vertical analysis is an analytical method in financial reports in which each item is recorded as a percentage of the basic figure in the report. Thus, line items on the financial statements can be specified as a percentage of gross sales, whereas line items on the balance sheet can be specified as a percentage of total assets or liabilities, and a vertical analysis on the statement of cash flows shows each cash inflow or outflow as a percentage of total incoming cash flow.

How Vertical Analysis Works

Vertical Analysis makes it easy to compare the financial statements of one company to another and even across different industries. Because relative proportions can be seen from the account balance. It also makes it easier to compare previous periods for time sequence analysis, where quarterly and annual figures are compared over a number of years, to get an idea of how performance metrics are improving or decreasing.

For example, by showing some line items on the revenue report as a percentage of sales, what contributes to profit margins and whether profitability has improved over time. Thus it becomes easier to compare the profitability of similar companies.

Financial reports that include vertical analysis clearly display line item percentages in separate columns. This type of financial report includes a detailed vertical analysis, known as a general measure financial report and is used by many companies to provide details about the company's financial condition.

Generic size financial reports often incorporate comparative financial statements that include a column for comparing each line item in the previous reported period.

Learn more about vertical analysis at https://brainly.com/question/28819100.

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