The Primary Focus of Horizontal Analysis Is

question 12

Multiple Choice

The primary focus of horizontal analysis is:

• A)percentage changes in line items from comparative financial statements.
• B)the balance sheet only.
• C)the amount of individual financial statement line items as a percentage of some related total,such as total assets.
• D)the income statement only.

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Definitions:

Operating Capacity

The maximum output or productivity level that a company can achieve using its current resources under normal working conditions.

Fixed Overhead Costs

Expenses that do not change with the level of production, such as rent or salaries of administrative staff.

Effect On Income

The impact of specific actions, events, or decisions on a company's net income or profitability.

Book Value

Book value is the net value of a company's assets as reported on the balance sheet, calculated by subtracting liabilities from the total assets.