The percentage analysis of increases and decreases in related items in comparative financial statements is called:
A) profitability analysis.
B) vertical analysis.
C) horizontal analysis.
D) solvency analysis.

Question

Quizplus · Accepted Answer

Horizontal analysis compares financial data over a period of time to identify significant changes, such as increases or decreases, in specific items. This is also known as trend analysis or comparative analysis. Vertical analysis involves analyzing financial data as a percentage of a base item, such as total assets or revenue, to understand the proportional representation of each item. Profitability analysis focuses on assessing a company's ability to generate profits, while solvency analysis focuses on a company's ability to meet its financial obligations.

The Percentage Analysis of Increases and Decreases in Related Items