(Learning Objective 1) Which of the following provides a year-to-year comparison of a company’s performance in two different years?
- a. Horizontal analysis
- b. Vertical analysis
- c. Ratio analysis
- d. Time study analysis
To identify: The appropriate answer for the given statement.
Answer to Problem 1QC
Option a. A year to year comparison of a company’s performance in two different years is provided by horizontal analysis.
Explanation of Solution
The methods of analyzing company’s performance by analyzing financial performance are:
- 1. Horizontal analysis
- 2. Vertical analysis
- 3. Ratio analysis
a.
Horizontal analysis is the correct option because horizontal analysis analyzes the year to year performance of the companies in two different years.
b.
Vertical analysis is not the correct option because vertical analysis compares the companies of different size and considers only one-year analysis.
c.
Ratio analysis is not the correct option because ratio analysis analyses the relationship between the components of the financial performance.
d.
Time study analysis is not the correct option because time study analysis the purposes of your own.
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Chapter 14 Solutions
Managerial Accounting (5th Edition)
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