Which of the following is the most direct method of focusing on changes in a company's balance sheet and income statement?
A) Comparing key ratios from one period to the next
B) Comparing account balances from one period to the next
C) Vertical analysis
D) Horizontal analysis

Question

Quizplus · Accepted Answer

A: Although comparing key ratios from one period to a next is one way to focus on changes in a company's financial statement, it is not the most direct method.
B: Comparing balances is probably the least effective way to analyze changes.
C: Vertical analysis converts the statements to common size statements for industry and other comparison.
D: Horizontal analysis is the most direct method to focus on changes.

Which of the Following Is the Most Direct Method of Focusing