The horizontal analysis is computed by which of the following formulas?
A) ((earlier period amount - later period amount)/base period amount) × 100
B) (later period amount/earlier period amount) × 100
C) (base period amount/dollar amount of change) × 100
D) (dollar amount of change/base period amount) × 100

Question

Quizplus · Accepted Answer

Horizontal analysis, also known as trend analysis, is used to compare financial data over a period of time. It is computed by taking the dollar amount of change between the period being compared and the base period, then dividing by the base period amount, and finally multiplying by 100 to express it as a percentage. This formula is accurately represented by option D.

The Horizontal Analysis Is Computed by Which of the Following