BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Horizontal Analysis
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Vertical Analysis
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Internal Analysis
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External Analysis
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Detailed explanation-1: -C) Vertical Analysis is also termed as dynamic analysis.
Detailed explanation-2: -Horizontal analysis is termed as dynamic analysis.
Detailed explanation-3: -Horizontal analysis is also referred to as trend analysis. Assume that the base year for analysis is three years earlier. All of the amounts on the balance sheets and the income statements for analysis will be expressed as a percentage of the base year amounts.
Detailed explanation-4: -Dynamic financial analysis (DFA) is a simulation approach that looks at an insurance enterprise’s risks holistically as opposed to traditional actuarial analysis, which analyzes risks individually.
Detailed explanation-5: -Horizontal Analysis – Percentage Change For example, let’s take the case of the income statement – if the gross profit in year 1 was US$40, 000 and in year 2 the gross profit was US$44, 000, the difference between the two is $4, 000. Here the change is positive and we can calculate the percentage change.