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John and Elizabeth evaluate three telecommunication companies to determine the best company to invest in. A horizontal analysis will enable them to make comparisons of financial statements of the three
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John and Elizabeth evaluate three telecommunication companies to determine the best company to invest in. A horizontal analysis will enable them to make comparisons of financial statements of the three companies over the past several years and help in the determination of the increase in their profits.

A. True
B. False

User Strake
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1 Answer

6 votes

Answer:

A) True

Step-by-step explanation:

A horizontal financial analysis is used to compare different financial ratios between companies that belong to the same industry, e.g. profit margins, return on assets, return on investments, etc. It can help John and Elizabeth determine what factors have been important in the companies' performance, either for good or worse.

It helps to compare a company against its past performance or against the performance of its competitors.

User Ctv
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