Which of the following best describes horizontal analysis?

Which of the following BEST describes horizontal analysis?

Comparing financial figures year to year
Comparing a company’s financial figures with other companies that are leaders
Calculation key ratios to evaluate performance
Showing each figure as a percentage of some other amount, such as total assets

Answer

Horizontal analysis compares single piece of information from year to another year.

Comparing company’s financial figures with other companies that are leaders – Bench marking

Showing each figure as a percentage of some other amount, such as total assets – vertical analysis

Calculation key ratios to evaluate performance – Ratio Analysis

Ans: A Comparing financial figures year to year

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