BACHELOR OF BUSINESS ADMINISTRATION

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BUSINESS ADMINISTRATION

FINANCIAL MANAGEMENT

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Which of the following statement is false?a. Horizontal analysis is used in the review of a company’s financial statements over multiple periods.b. Horizontal analysis usually depicts percentage growth over the same line item in the base year.c. Horizontal analysis does not allow financial statement users to easily spot trends and growth patterns.
A
b
B
a
C
c
D
All statements are false
Explanation: 

Detailed explanation-1: -The horizontal analysis shows the comparative increase or decrease trend in the financial statements with respect to the same element in the previous year’s value.

Detailed explanation-2: -Horizontal analysis is used in the review of a company’s financial statements over multiple periods. It is usually depicted as percentage growth over the same line item in the base year. Horizontal analysis allows financial statement users to easily spot trends and growth patterns.

Detailed explanation-3: -Horizontal analysis is the comparison of historical financial information over various reporting periods. It helps determine a companies’ growth and financial position versus competitors. The horizontal analysis technique uses a base year and a comparison year to determine a company’s growth.

Detailed explanation-4: -C) Cash flow analysis is an example of horizontal analysis.

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