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Question
Assertion (A): Vertical Analysis provides information in absolute and percentage form.
Reason (R): Vertical Analysis is useful in making intra-firm comparisons.
In the context of the above two statements, which of the above options is correct?
Options
Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation for Assertion (A).
Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation for Assertion (A).
Assertion (A) is correct, but Reason (R) is not correct.
Both Assertion (A) and Reason (R) are not correct.
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Solution
Both Assertion (A) and Reason (R) are not correct.
Explanation:
Both Assertion and Reason are incorrect. Vertical (common‑size) analysis expresses each item as a percentage of a common base for a single period (a static, cross‑sectional technique) rather than giving absolute figures, while horizontal (trend) analysis is the one that shows absolute and percentage changes across two or more periods and is used for intra‑firm (time‑series) comparisons.
