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Question
Which technique of financial analysis shows a comparative study of items or components of financial statements for two or more years?
Options
Common-size Statement
Ratio Analysis
Comparative Statement
Trend Analysis
MCQ
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Solution
Comparative Statement
Explanation:
A Comparative Statement (also known as horizontal analysis) places the financial data of two or more years side-by-side in sequential columns. This presentation allows an analyst to evaluate the exact changes in both absolute rupee values and relative percentages for individual items or components over time. By comparing consecutive accounting periods horizontally, this technique makes it simple for a business to map growth trends and assess structural fluctuations across various years.
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