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Answer (D) is correct . Vertical, common-size analysis compares the components within a set of financial statements. A base amount is assigned a value of 100%. For example, total assets on a common-size balance sheet and net sales on a common-size income statement are valued at 100%. Common-size statements permit evaluation of the efficiency of various aspects of operations. An analyst who states that advertising expense is 2% of sales is using vertical, common-size analysis.

Answer (A) is incorrect because Vertical integration occurs when a corporation owns one or more of its suppliers or customers.
Answer (B) is incorrect because Vertical, common-size analysis restates financial statements amounts as percentages.
Answer (C) is incorrect because A statement that advertising expense is 2% greater than in the previous year results from horizontal analysis.