Horizontal Analysis of Comparative Financial Statements Includes the

question 48

Multiple Choice

Horizontal analysis of comparative financial statements includes the

• A)development of common-size statements.
• B)calculation of liquidity ratios.
• C)calculation of dollar amount and percentage changes from financial statements over a period of time, as compared to a base year.
• D)evaluation of financial statement data that expresses each item in a financial statement as a percentage of a base amount.

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Definitions:

Contribution Margin Ratio

The contribution margin ratio is a financial metric that shows what percentage of sales revenue is not consumed by variable costs and thus contributes to covering fixed costs.

Fixed Costs

Costs that remain constant regardless of a company's level of activity, including expenses like lease payments, wages, and premiums.

Break-even Point

The point at which total costs and total revenue are equal, meaning no net loss or gain, and the business has "broken even."

Sales Dollars

A term used to represent the total value, in monetary terms, of all sales transactions within a specified period.