Understanding Trend Analysis in Financial Reporting

Very Easy Analysis Techniques Trend Analysis

Trend analysis is a financial analysis technique that evaluates financial statements over a specific period of time to identify patterns and trends. This method helps in forecasting future performance based on historical data. Companies often present their financial data in a format that shows trends in revenue, expenses, and net income.

Based on the concept of trend analysis, which of the following statements is most accurate?

Trend analysis only applies to the current financial year.

Trend analysis requires at least two periods of financial data to identify a trend.

Trend analysis is only used for evaluating revenue changes.

Hint

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