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Chapter 6. Statement Analysis > Using Dollar and Percent Changes in Statement A...

Using Dollar and Percent Changes in Statement Analysis

Another way of viewing changes over time in income statements and balance sheets is by means of dollar changes and percentage changes (see Figure 6.6). To express changes over time in terms of dollars, you consolidate two reports into one by showing—for each category—the difference in dollars between the two. Or you might decide to consolidate the information by dividing each category in one report by the same category in the other. This expresses changes over time as percentages.

Figure 6.6. With comparative balance sheets and income statements, you can better focus on changes over time by calculating year-to-year differences.



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