The type of analysis being carried out when a company's gross profit ratio for three years is graphed and compared with the average industry gross profit ratio calculated over the same time period is:
A)parallel analysis.
B)vertical analysis.
C)trend analysis.
D)gearing analysis.

Question

Quizplus · Accepted Answer

The type of analysis being carried out is trend analysis, as it involves comparing the company's gross profit ratio for three years with the average industry gross profit ratio calculated over the same time period to identify any trends or changes in performance over time. Parallel analysis involves comparing the financial statements of two or more companies within the same industry for a single time period, while vertical analysis involves analyzing the relationship between items within a single financial statement. Gearing analysis involves assessing a company's financial leverage and its ability to meet its debt obligations.

The Type of Analysis Being Carried Out When a Company's