The percentage analysis of increases and decreases in individual items in comparative financial statements is called
A) vertical analysis
B) solvency analysis
C) profitability analysis
D) horizontal analysis

Question

Quizplus · Accepted Answer

Horizontal analysis compares the percentage changes in individual items between different periods in comparative financial statements. Vertical analysis involves expressing each item as a percentage of a base amount, such as net sales or total assets. Solvency analysis examines a company's ability to meet long-term financial obligations. Profitability analysis focuses on a company's ability to generate earnings from its operations.

The Percentage Analysis of Increases and Decreases in Individual Items