A percentage analysis of increases and decreases in related items on comparative financial statements

A) Solvency
B) Leverage
C) Times interest earned
D) Horizontal analysis
E) Vertical analysis
F) Common-sized financial statements
G) Current position analysis
H) Profitability analysis

Horizontal analysis compares financial data over a period of time to measure changes in an entity's financial condition.

Answer: E
Vertical analysis compares each item on a financial statement as a percentage of a base amount, typically the net sales on an income statement or total assets on a balance sheet.

Answer: F
Common-sized financial statements present financial statements in a standardized format making it easier to compare financial data across entities or industries.

Answer: G
Current position analysis reviews an entity's liquidity, or its ability to meet short-term obligations, through current assets and current liabilities.

Answer: H
Profitability analysis measures the entity's ability to generate profits, typically measured by return on assets, return on equity or profit margin ratios.