Asked by Bryce Bloomquist on May 14, 2024
Verified
In horizontal analysis
A) changes in a company's operating results and financial position over time are expressed in percentages as well as dollars
B) monetary relationships between items on the financial statements of a period are expressed in percentages as well as dollars
C) financial statements are expressed only in percentages
D) liquidity ratios, generally involving components of the company's working capital, are computed
Horizontal Analysis
A financial analysis technique used to evaluate trends over time by comparing line items in financial statements, such as assets, liabilities, and equity, across multiple periods.
Liquidity Ratios
Financial metrics used to determine a company's ability to pay off its short-term debts with its current assets.
- Acquire an understanding of the relevance of different financial analytical methods (horizontal, vertical), and how they are compared.
Verified Answer
OM
Olivia MillerMay 16, 2024
Final Answer :
A
Explanation :
Horizontal analysis compares financial data over time, expressing changes in both dollars and percentages to show trends in a company's operating results and financial position. It is different from vertical analysis, which expresses monetary relationships between items on the financial statements of a period only in percentages. Liquidity ratios are not specific to horizontal analysis.
Learning Objectives
- Acquire an understanding of the relevance of different financial analytical methods (horizontal, vertical), and how they are compared.
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