Reference no: EM132626708

Problem 1: Which of the following statements about horizontal analysis is correct?

Option 1: It determines the profitability of an entity.

Option 2: It compares numbers reported on the financial statements in the current period with those from the previous period.

Option 3: It requires a minimum of 3 years of data to provide meaningful analysis.

Option 4: It compares numbers reported on a financial statement to others on the same statement.

Problem 2: Financial analysis is useful for:

Option 1: decision making.

Option 2: all of the options listed.

Option 3: evaluating the performance of an entity.

Option 4: evaluating the financial health of an entity.

Problem 3: Using the data below to perform a trend analysis, and assuming that year 1 is the base year, the value assigned to sales revenue for year 2 is:

Sales Revenue Year 1 $180 000

Year 2 155 000

Year 3 210 000

Option 1: 100.

Option 2: 135.

Option 3: 86.

Option 4: 116.