How is horizontalanalysis of financial statements accomplished?
A) By placing statement items on an after-tax basis.
B) By common-size statements.
C) By calculating both earnings per share and the price-earnings ratio.
D) By trend percentages.

Question

Quizplus · Accepted Answer

Horizontal analysis of financial statements is accomplished through trend percentages, which show the percentage change over time for each line item on the financial statement. This allows for easy comparison and identification of trends in financial performance. Choice A is not relevant to horizontal analysis, choice B is a method used within horizontal analysis but not the overarching analysis itself, and choice C is focused only on earnings rather than the full financial statement.

How Is Horizontalanalysis of Financial Statements Accomplished