Horizontal analysis is performed when:
A) total assets are set at 100% and all other balances are shown as a percentage of total assets.
B) financial statement data are shown for two periods with the amount and percentage of change for each line item.
C) there is a need to calculate and compare key ratios from period to period.
D) income statement amounts are shown as a percentage of total sales.

Question

Quizplus · Accepted Answer

Horizontal analysis compares financial statement data for two periods and shows the amount and percentage of change for each line item. Option A is referring to vertical analysis. Option C is referring to ratio analysis. Option D is referring to a specific type of vertical analysis called common-size analysis.

Horizontal Analysis Is Performed When