The McCumber Corporation data for the current year: With respect to selling/general expenses, what would a horizontal analysis report?
A)The current ratio is 0.92.
B)There was a 4.47% increase from prior to current year.
C)There was a 4.28% decrease from prior to current year.
D)Selling/general expenses are 7.74% of net sales revenue.

Question

The McCumber Corporation data for the current year:  With respect to selling/general expenses, what would a horizontal analysis report?
A)The current ratio is 0.92. 
B)There was a 4.47% increase from prior to current year. 
C)There was a 4.28% decrease from prior to current year. 
D)Selling/general expenses are 7.74% of net sales revenue.

Quizplus · Accepted Answer

A horizontal analysis compares data from the current year to data from a prior year. The question does not provide prior year data for selling/general expenses, so it is impossible to calculate the current year's expenses as a percentage of the prior year's expenses. Therefore, choices A and D can be eliminated. The correct answer is C, which indicates a 4.28% decrease from the prior year's selling/general expenses.

The McCumber Corporation Data for the Current Year: with Respect