When a financial statement analyst compares figures for a company's revenues over a five-year period, this can best be describes as an example of
A) Vertical analysis
B) Horizontal analysis
C) Credit analysis
D) Solvency analysis

Question

Quizplus · Accepted Answer

Comparing figures for a company's revenues over a five-year period is an example of horizontal analysis, which is the analysis of financial statements over time to track changes in figures and identify trends. Vertical analysis is the analysis of financial statements for a single time period to compare figures as a percentage of a base figure (usually total assets or total revenues). Credit analysis is the assessment of a borrower's ability to repay debt, while solvency analysis is the assessment of a company's ability to meet its long-term financial obligations.

When a Financial Statement Analyst Compares Figures for a Company's