Horizontal Analysis

question 7

Multiple Choice

Horizontal analysis

• A)is financial statement data that is viewed horizontally from the right to left across time.
• B)requires the financial statement data under analysis to be divided by the base amount in that financial statement.
• C)is financial statement data that is viewed vertically from top to bottom within the same period of time.
• D)is always used for intercompany comparisons.

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Definitions:

Productive Investment Opportunities

Investments that potentially lead to an increase in productive capacity and economic growth.

Perfect Knowledge

A hypothetical situation where all parties in a market have complete and accurate information about the market conditions and the goods or services involved.

Competitive Markets

Competitive markets are characterized by many buyers and sellers, where no single entity has the power to significantly influence prices for goods and services.

Economic Profits

Profits exceeding the total costs of inputs including opportunity costs, typically representing gains beyond the normal profit levels.