{"id":56851,"date":"2024-04-16T00:51:52","date_gmt":"2024-04-16T00:51:52","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=56851"},"modified":"2024-04-16T00:51:52","modified_gmt":"2024-04-16T00:51:52","slug":"comparison-of-the-financial-statements-of-the-current-year-with-the-performance-of-previous-years-of-the-same-firm-is-known-as","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/comparison-of-the-financial-statements-of-the-current-year-with-the-performance-of-previous-years-of-the-same-firm-is-known-as\/","title":{"rendered":"Comparison of the financial statements of the current year with the performance of previous years of the same firm is known as"},"content":{"rendered":"

[amp_mcq option1=”Trend analysis” option2=”Horizontal analysis” option3=”Intra-firm comparison” option4=”All of the above” correct=”option1″]<\/p>\n

The correct answer is: A. Trend analysis<\/strong><\/p>\n

Trend analysis is a technique used to compare financial statements of a company over a period of time to identify trends and patterns. It is a horizontal analysis, which is a comparison of financial statements of the same company over a period of time. Intra-firm comparison is a comparison of the financial statements of different companies within the same industry.<\/p>\n

Trend analysis is a useful tool for investors and analysts to track the performance of a company over time. It can be used to identify areas of strength and weakness, and to make predictions about future performance.<\/p>\n

Here is an example of trend analysis:<\/p>\n

A company’s net income for the past five years is as follows:<\/p>\n

Year | Net Income
\n——- | ——–
\n2017 | $10 million
\n2018 | $12 million
\n2019 | $14 million
\n2020 | $16 million
\n2021 | $18 million<\/p>\n

As you can see, the company’s net income has been increasing steadily over the past five years. This is a positive trend, and it suggests that the company is doing well.<\/p>\n

However, it is important to note that trend analysis can only be used to identify trends, not to make predictions about future performance. The company’s net income could start to decline in the future, even though it has been increasing steadily in the past.<\/p>\n

Therefore, it is important to use trend analysis in conjunction with other financial analysis techniques to get a complete picture of a company’s performance.<\/p>\n","protected":false},"excerpt":{"rendered":"

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