Question 8 The variability of a company's operating income can be measured by calculating: O the standard deviation of operating income O the coefficient of variation of net income O the beta of the company the correlation coefficient between operating income and sales

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Vertical Statement Analysis

Vertical statement analysis is a financial statements analysis tool that is used to establish a correlation between the base item and every line item in the financial statements. In vertical statement analysis, each line item in financial statements is reflected as a percentage of the base item. In the income statement, each line item is represented as a percentage of the gross turnover because gross turnover is considered as a base figure in income statement analysis. In the balance sheet, each line item is reflected as a percentage of total assets or liabilities.