Horizontal & Vertical Analysis - MCQs with answers

Horizontal & Vertical Analysis - MCQs with answers


1. The second term for Horizontal Analysis is

a) Dynamic Analysis
b) Inter-firm Analysis
c) Time-series Analysis
d) All of the above

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ANSWER: d) All of the above



2. Vertical analysis is also known as

a) Static analysis
b) Structural analysis
c) Cross-sectional analysis
d) All of the above

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ANSWER: d) All of the above



3. The assessment of financial statements by a shareholder is an example of

a) Vertical Analysis
b) Horizontal Analysis
c) Internal Analysis
d) External Analysis

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ANSWER: d) External Analysis



4. Trend percentages and trend ratios are used in

a) Static Analysis
b) Dynamic Analysis
c) Horizontal Analysis
d) Vertical Analysis

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ANSWER: a) Static Analysis



5. Which of the following statements are true?

A) Vertical Analysis is also termed as dynamic analysis.
B) Horizontal analysis is also termed as dynamic analysis.
C) Static Analysis is not extremely useful for the long-term financial planning.

a) Both A and B
b) Both A and C
c) Both B and C
d) A, B , C

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ANSWER: c) Both B and C



6. Which of the following statements are true?

A) Funds Flow statement is one of the ways to analysis & interpret financial statements.

B) Cash Flow Statement is one of the ways to analysis & interprets financial statements.

C) Common-size statement one of the ways to analysis & interprets financial statements.

a) Both A and B
b) Both A and C
c) Both B and C
d) A, B, C

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ANSWER: d) A, B, C



7. Which of the following statements are true about Horizontal Analysis?

A) It do not examines the periodical trend
B) It is useful for long-term analysis.
C) It is useful for long –term planning.

a) Both A and B
b) Both A and C
c) Both B and C
d) A, B, C

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ANSWER: c) Both B and C



8. Which of the following statements are true?

A) Comparative financial statement is an example of horizontal analysis.
B) Trend Analysis is an example of vertical analysis.
C) Cash flow analysis is an example of horizontal analysis.

a) Both A and B
b) Both A and C
c) Both B and C
d) A, B, C

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ANSWER: b) Both A and C



9. John N. Myer stated that vertical and horizontal analysis forms the back-bone of financial statement analysis technique.

a) True
b) False

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ANSWER: a) True



10. Ratio analysis is an important approach of horizontal analysis.

a) True
b) False

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ANSWER: b) False


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