Horizontal analysis:
A) Is a method used to evaluate changes in financial data across time.
B) Is also called vertical analysis.
C) Is the presentation of financial ratios.
D) Is a tool used to evaluate financial statement items relative to industry statistics.
E) Evaluates financial data across industries.

Question

Quizplus · Accepted Answer

Horizontal analysis is a method used to evaluate changes in financial data across time, such as comparing the financial statements of a company from one year to the next. Vertical analysis is a different method that expresses each line item on a financial statement as a percentage of a base number, such as total assets or revenues. Financial ratios are a tool used to analyze relationships between different financial statement items, and can be used in horizontal or vertical analysis.Comparing financial data across industries is a form of benchmarking, which is a separate analysis technique.

Horizontal Analysis