Question

Sales in horizontal analysis may have ___, but in ___, this fact is not very helpful.

a) Trends, Isolation

b) Fluctuations, Isolation

c) Consistency, Trends

d) Isolation, Fluctuations

Answer 1

Sales fluctuations in horizontal analysis are not very helpful in isolation. Trends and industry benchmarks are important factors to consider in order to understand the significance of these fluctuations.

Step-by-step explanation:

Sales in horizontal analysis may have fluctuations, but in isolation, this fact is not very helpful. In horizontal analysis, sales figures are compared over a period of time, such as from one year to the next. Fluctuations in sales can indicate changes in the company's performance or market conditions. However, without context or comparison to other financial statements or industry benchmarks, these fluctuations may not provide meaningful insights.

For example, if a company's sales increased by 10% compared to the previous year, it could be seen as positive growth. But if the industry average growth rate is 20%, the company's performance may not be as favorable in comparison. Therefore, trends and industry benchmarks are important factors to consider in horizontal analysis to understand the significance of fluctuations in sales.