What is analysed by Trend analysis/ horizontal analysis?
A)Comparing the firms performance with its historical performance
B)Breakdown of the total revenue over differing business segments to enable comparison between businesses.
C)Comparing the firms performance based on industry wide trends
D)The performance of other firms in the same industry adjusted for size of the firm

Question

Quizplus · Accepted Answer

Trend analysis, also known as horizontal analysis, involves comparing a company's financial performance over various years to evaluate its financial performance. By analyzing the trend of financial data, it assists in determining the company's growth prospects and facilitates the interpretation of financial ratios. A deeper analysis of financial performance is aided by comparing it with historical financial data to determine whether the company's financial performance is improving or worsening over time. Therefore, comparing a firm's performance with its historical performance is the most accurate answer.

What Is Analysed by Trend Analysis/ Horizontal Analysis