The type of analysis used to analyze trends in financial statement data over time is:
A)Horizontal analysis
B)Vertical analysis
C)Diagonal analysis

Question

Quizplus · Accepted Answer

Horizontal analysis compares financial data over time by showing the percentage change in line items on financial statements from one period to another. This allows for trend analysis to identify increases or decreases in revenue, expenses, or other important financial metrics. Vertical analysis compares line items to a base amount, usually total revenue or total assets, in order to analyze the proportion of expenses or other line items relative to the overall financial picture. Diagonal analysis is not a commonly used term in financial analysis.

The Type of Analysis Used to Analyze Trends in Financial