An accurate description of horizontal analysis would be which of the following?
A)Study of percentage changes in various financial statement amounts from year to year
B)Study of changes in individual financial statement amounts as a percentage of a related base amount
C)Study of changes in key financial ratios from year to year
D)None of the above

Question

Quizplus · Accepted Answer

Horizontal analysis is studying the percentage changes in various financial statement amounts from year to year. This type of analysis is useful to see trends in a company's financial performance over time. B is incorrect because it describes vertical analysis, which compares individual financial statement amounts to a related base amount. C is incorrect because it describes ratio analysis, which looks at the relationship between different financial statement amounts.

An Accurate Description of Horizontal Analysis Would Be Which of the Following