Understanding Trend Analysis in Financial Reporting

Easy Analysis Techniques Trend Analysis

An analyst is evaluating the performance of a company over the past five years to determine its financial health and growth potential. As part of the analysis, the analyst looks at the company's revenue figures from the past years and creates a chart to display the trend in revenue.

Which of the following statements is TRUE regarding the use of trend analysis in this context?

Trend analysis only looks at the percentage change in revenue year-over-year.

Trend analysis can help identify consistent revenue growth or decline over multiple periods.

Trend analysis is most useful when assessing a single year’s performance.

Hint

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