Horizontal analysis involves comparing financial data across multiple periods to identify trends and patterns over time.
Year-over-Year Trends:
This method helps in understanding changes in financial performance and position year-over-year.
Options Analysis:
Option A: Horizontal analysis is directly related to comparing data year-over-year.
Option B: Vertical analysis involves comparing items on a financial statement as a percentage of a base figure within the same period.
Option C: Common-size analysis is a type of vertical analysis where all items are expressed as a percentage of a common base.
Option D: Ratio analysis evaluates relationships between different financial statement items but is not primarily focused on year-over-year trends.
Conclusion:
Horizontal analysis is most closely associated with year-over-year trends as it involves reviewing financial data across periods.
[:, Financial Analysis and Reporting Guidelines, , ]
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