Horizontal analysis of comparative financial statements includes the
A) development of common-size statements.
B) calculation of dollar amount changes and percentage changes from the previous to the current year.
C) calculation of the percentage of net sales for each item listed.
D) calculation of liquidity ratios.

Question

Quizplus · Accepted Answer

Horizontal analysis of comparative financial statements involves comparing financial data over multiple periods by calculating dollar amount changes and percentage changes from the previous year to the current year. This allows for an understanding of how specific line items or accounts have changed over time. Choices A and C involve developing and analyzing common-size financial statements, which is a separate technique for financial analysis. Choice D involves calculating liquidity ratios, which is a separate financial analysis technique focused on a company's ability to meet short-term obligations.

Horizontal Analysis of Comparative Financial Statements Includes the