21. Comparison of absolute amounts from financial statements of two different companies might be misleading because of the materiality of the amounts. How can the financial statement analyst overcome or avoid this difficulty?
22. Assume that you are doing trend (horizontal) analysis using information from a company's income statements. You have income statement information for three years (sales, gross margin, etc.) What basic approaches could you use in doing the analysis?
23. What is vertical financial statement analysis?
24. Explain the difference between horizontal analysis and vertical analysis of a company's financial statements.
25. How would you do vertical analysis of an income statement? Of a balance sheet?
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