Which of the Following Best Describes Horizontal Analysis

question 102

Multiple Choice

Which of the following best describes horizontal analysis?

• A)comparing financial statement amounts from year to year for the same company
• B)expressing each financial statement amount as a percentage of a budgeted amount
• C)comparing a company's financial statements with other companies
• D)calculating key ratios to evaluate performance

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Definitions:

Tax Rate

The determined percentage of earnings that an individual or a corporation must contribute as tax.

Debt-equity Ratio

This ratio compares a company's total liabilities to its shareholder equity, indicating the relative proportion of shareholder equity and debt used to finance a company's assets.

Pre-tax Cost

This is the cost of an investment or financial activity before the application of taxes.

Cost of Equity

The return that investors expect for investing in a company's equity, often estimated using models like the Capital Asset Pricing Model (CAPM).