Question

define the procedure for calculating trend percentage ?

Answer 1

Trend percentages are similar to horizontal analysis except that comparisons are made to a selected base year or period. Trend percentages are useful for comparing financial statements over several years because they disclose changes and trends occurring through time.Trend percentages, also referred to as index numbers, help you to compare financial information over time to a base year or period. You can calculate trend percentages by:

Selecting a base year or period.

Assigning a weight of 100% to the amounts appearing on the base-year financial statements.

Expressing the corresponding amounts on the other years’ financial statements as a percentage of base-year or period amounts. Compute the percentages by Analysis year amount / base year amount and then multiplying the result by 100 to get a percentage.