Horizontal analysis of comparative financial statements includes the
A) development of common size statements.
B) calculation of liquidity ratios.
C) calculation of dollar amount changes and percentage changes from the previous to the current year.
D) the evaluation of each component in a financial statement to a total within the statement.

Question

Quizplus · Accepted Answer

Horizontal analysis of comparative financial statements involves comparing the dollar amount and percentage changes from the previous to the current year. This helps to identify trends and changes in financial performance over time. Common size statements and ratio analysis are other tools that may be used in financial analysis, but they are not specifically part of horizontal analysis of comparative financial statements. Evaluating each component in a financial statement to a total within the statement is more indicative of vertical analysis.

Horizontal Analysis of Comparative Financial Statements Includes the