Comparing operating expenses in 2017 with operating expenses in 2016 is an example of:
A) horizontal analysis
B) vertical analysis
C) ratio analysis
D) economic-value-added analysis

Question

Quizplus · Accepted Answer

Comparing operating expenses in two different years is an example of horizontal analysis, which evaluates changes in financial statement items over time. Vertical analysis compares financial statement items as a percentage of a single base amount, while ratio analysis involves analyzing the relationship between different financial statement items. Economic-value-added analysis involves assessing whether a company is generating value for its shareholders after accounting for the cost of capital.

Comparing Operating Expenses in 2017 with Operating Expenses in 2016