Select the Incorrect Statement Regarding Horizontal Analysis

question 93

Multiple Choice

Select the incorrect statement regarding horizontal analysis.

• A) Percentage analysis involves establishing the relationship of one amount to another.
• B) A horizontal analysis of cost of goods sold on the income statement includes dividing net income by total revenue.
• C) Percentage analysis attempts to eliminate the materiality problem of comparing firms of different sizes.
• D) In doing horizontal analysis, an account is expressed as a percentage of the previous balance of the same account.

Determine the payback period for various investments.

Understand and compute the crossover rate between two investment projects.

Calculate the profitability index of a project given its cost and cash flows.

Determine the discounted payback period for projects with different cash flows.

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Definitions:

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