Trend Statement

This technique is used when comparing financial statements spanning more than three years. This technique involves constructing a trend statement using a base year given the value of 100. This technique is also called as index number trend analysis. The base year figures are all taken as 100 and should be so selected that it represents a normal period with regard to business conditions. Then the items of subsequent period are expressed in terms of base period (relative to their value in the base period)

Following are the total revenues and operating incomes of Infosys from 2001 to 2006. Index number trend analysis is done by taking the year 2001 as base:

(Rs. in crore)

Following is the graphical representation of the above index number trend analysis.  Here also it is showing that increase in net revenue is lower than the net increase in operating incomes. This is mainly because of increase in other expenses.

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