Horizontal Analysis of Comparative Financial Statements Includes

question 13

Multiple Choice

Horizontal analysis of comparative financial statements includes

• A) development of common-sized statements
• B) calculation of liquidity ratios
• C) calculation of dollar amount changes and percentage changes from the previous to the current year
• D) evaluation of each component in a financial statement to a total within the statement

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Definitions:

Potential Drop

An anticipated decrease in value or performance, often used in the context of stocks or electrical voltage.

Earnings

The profit a company generates during a particular period, often used as a measure of its financial performance.

Effective Rate

The effective rate is the actual interest rate that a borrower pays on a loan or receives on a deposit account, after the compounding of interest is taken into account.

Contract Rate

The interest rate specified in a financial contract, notably in loans or leases, that must be paid over the duration of the agreement.