Welcome to the NCERT Solutions for Class 12 Accountancy - Company Accounts and Analysis of Financial Statements - Chapter Analysis of Financial Statement. This page offers a step-by-step solution to the specific question from Exercise 2, Question 2: . With detailed answers and explanations for each chapter, students can strengthen their understanding and prepare confidently for exams. Ideal for CBSE and other board students, this resource will simplify your study experience.
Explain the usefulness of trend percentages in interpretation of financial performance of a company.
1) 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: Compute the percentages by Analysis year amount / base year amount and then multiplying the result by 100 to get a percentage.
2) Trend analysis tries to predict a trend, such as a bull market run, and ride that
trend until data suggests a trend reversal, such as a bull-to-bear market. Trend
analysis is helpful because moving with trends, and not against them, will lead to profit for an investor.
3) Trend analysis can improve your business by helping you identify areas with your organisation that are doing well, as well as areas that are not doing well. In
this way it provides valuable evidence to help inform better decision making
around your longer-term strategy as well as ways to futureproof your business.
4) Trends are an opportunity to do something new not just from an individual
standpoint, but on a macro level. Trends allow us to shift cultural currents and
ultimately depict an underlying intuition.
NCERT questions are designed to test your understanding of the concepts and theories discussed in the chapter. Here are some tips to help you answer NCERT questions effectively:
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