Michaud Ltd. has the following information available for 2011 and 2012: Which of the following statements is true regarding horizontal analysis with respect to Michaud?
A) It would show total assets has increased by 30 percent.
B) It would show total assets has increased by 53.8 percent.
C) There is not enough information available to perform horizontal analysis.
D) Horizontal analysis can not be performed using total assets.

Question

Michaud Ltd. has the following information available for 2011 and 2012:  Which of the following statements is true regarding horizontal analysis with respect to Michaud?
A) It would show total assets has increased by 30 percent. 
B) It would show total assets has increased by 53.8 percent. 
C) There is not enough information available to perform horizontal analysis. 
D) Horizontal analysis can not be performed using total assets.

Quizplus · Accepted Answer

The provided information includes the figures for both 2011 and 2012, which are required for horizontal analysis. By using the formula of [(current year amount - base year amount) / base year amount] x 100, we can calculate the change in total assets. Using this formula, we get [(1,000,000 - 650,000) / 650,000] x 100 = 53.8%, indicating that the total assets have increased by 53.8% between 2011 and 2012. Therefore, option B is the correct choice.