Which of the following analysis techniques selects a base year, sets it at 100 and then calculates the change in subsequent years as a percentage of the base year?
A) Common-size statements
B) Percentage changes
C) Index number trends
D) Trend analysis

Question

Quizplus · Accepted Answer

This technique is known as index number trends, which involves choosing a base year and setting the index for that year to 100. Subsequent years' values are then expressed as percentages of the base year, allowing for easy comparison and trend analysis. Common-size statements express items on a financial statement as a percentage of a common base, while percentage changes simply calculate the percentage difference between two values. Trend analysis examines changes in financial data over time to identify patterns or trends.

Which of the Following Analysis Techniques Selects a Base Year