Question

Horizontal analysis is performed when: Group of answer choices total assets are set at 100% and all other balances are shown as a percentage of total assets. financial statement data are shown for two periods with the amount and percentage of change for each line item. there is a need to calculate and compare key ratios from period to period. income statement amounts are shown as a percentage of total sales.

Answer 1

Horizontal analysis is performed when financial statement data are shown for two periods with the amount and percentage of change for each line item.

This type of analysis helps businesses to determine changes and growth in their finances over a certain period of time. In this method, the first year's balance is taken as 100%, and the second year's balance is calculated as a percentage of the first year's balance.

Horizon analysis also helps businesses to determine which areas of their finances have grown or declined over a certain period. It can be helpful in determining whether a business is making progress toward its financial goals. Furthermore, this method can also assist businesses in evaluating their current financial position and determining the best course of action to take for the future.Horizon analysis is a crucial financial management tool, which helps businesses in evaluating their financial position. This process is performed by calculating the percentage change between two financial periods and analyzing the result.