Horizontal analysis of comparative financial statements includes
A) development of common-sized statements
B) calculation of liquidity ratios
C) calculation of dollar amount changes and percentage changes from the previous to the current year
D) evaluation of each component in a financial statement to a total within the statement

Question

Quizplus · Accepted Answer

Horizontal analysis involves calculating the dollar amount changes and percentage changes from the previous year to the current year. This type of analysis allows for comparisons of financial information across time periods. While developing common-sized statements, calculating liquidity ratios, and evaluating components to a total within the statement are all important types of financial analysis, they are not specific to the horizontal analysis of comparative financial statements.

Horizontal Analysis of Comparative Financial Statements Includes