Comparing changes in net income for one company over time is an example of:
A)Vertical analysis.
B)Horizontal analysis.
C)Diagonal analysis.
D)Both vertical and horizontal analysis.

Question

Quizplus · Accepted Answer

Comparing changes in net income for one company over time is an example of horizontal analysis, as it involves analyzing changes in financial data over a period of time (i.e. horizontally) to identify trends and patterns. Vertical analysis, on the other hand, involves comparing different components of financial data within the same period (i.e. vertically) to understand their relative importance and contribution to the overall financial health of the company. Diagonal analysis is not a recognized form of financial analysis. Therefore, the best answer is B.

Comparing Changes in Net Income for One Company Over Time