abhishreshthaa
Abhijeet S
TREND PERCENTAGE ANALYSIS
This analysis is an important tool of horizontal financial analysis. This method is immensely helpful in making a comparative study of financial statement of several years. Under this method trend percentage is calculated for each items of the financial statement taking the figures of the base year as 100.
The starting year is usually taken as the base year. The trend percentage shows the relationship of each item with its preceding year’s percentage. This percentage can also be presented in the form of index number showing relative changes in the financial of certain year.
This will exhibit the directions (upwards or downwards trend) of which the concern is proceeding.
These trend ratios may be compared with the industry in order to know the strong and weak point of a concern. These are calculated for major items instead for all items.
This analysis is an important tool of horizontal financial analysis. This method is immensely helpful in making a comparative study of financial statement of several years. Under this method trend percentage is calculated for each items of the financial statement taking the figures of the base year as 100.
The starting year is usually taken as the base year. The trend percentage shows the relationship of each item with its preceding year’s percentage. This percentage can also be presented in the form of index number showing relative changes in the financial of certain year.
This will exhibit the directions (upwards or downwards trend) of which the concern is proceeding.
These trend ratios may be compared with the industry in order to know the strong and weak point of a concern. These are calculated for major items instead for all items.