12.2 Perform a horizontal analysis of financial statements
1) Knowing the dollar amount of change from year-to-year in an account is less relevant than knowing the percentage change.
2) Computing trend percentages over a period of years helps to indicate the direction in which the business is going.
3) In computing trend percentages, the most recent year amounts become the base and are always set to 100%.
4) Horizontal analysis is only done on the income statement.
5) The sales of Mark's Online for the years 2009, 2010, and 2011 are $40,000, $60,000, and $80,000, respectively. If 2009 is the base year, the trend percentage for 2010 is:
A) 0%..
B) 150%.
C) 200%.
D) 133%.
E) 105%.
6) The revenue of Rick's Motorcycles for the years 2009, 2010, and 2011 is $75,000, $100,000 ,and $200,000, respectively. If 2009 is the base year, the trend percentage for 2010 is:
A) 33%.
B) 100%.
C) 133%.
D) (62.5%).
E) 25%.
7) Patty's Baker has cost of goods sold for the years 2011, 2010, and 2009 respectively of $28,600, $26,900, and $25,600. If 2009 is the base year, the trend percentage for 2011 is:
A) 111.72%.
B) 11.72%.
C) 105.08%.
D) 5.08%.
E) 104.9%.
8) If current assets were $100,000 in 2009 and $88,000 in 2010, what was the amount of increase or decrease in percentage terms from 2009 to 2010? (Round to the nearest percent.)
A) Increase of 14%
B) Decrease of 14%
C) Increase of 12%
D) Decrease of 12%
E) Decrease if 25%
9) The most recent period in a horizontal analysis is called the __________ period.
10) Which analysis deals with the percentage of changes in certain items over a period of years?