Question

Nusreen, a financial manager in a company, compares the operating budgets from the past three years to identify trends in the cost of materials purchased and to learn whether the company's net expenses have increased or decreased over the time span. Nusreen is using _____ to compare the financial statements.

Answer 1

Answer: Horizontal analysis

Explanation: In simple words, horizontal analysis refers to the process of evaluation of the financial statement with respect to different time periods. This analysis is done by the managers for determining the trends that can affect the future business.

In the given case, Nusreen is evaluating the budgets from past three years to evaluate the expense position in the current period.

Hence we can conclude that Nusreen is using horizontal analysis.