Comparative Financial Statement Analysis Methods

Comparative Financial Statement Analysis Methods

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Question

Which of the following methods is the best way of conducting a comparative financial statement analysis?

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A. B. C. D. E.

D

An index-number trend series analysis is quite useful when comparing financial statements that cover more than two or three periods with a year-to-year change analysis. The year-to-year change analysis method can be cumbersome when attempting to compare three or more periods.