Horizontal analysis is known as:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → dynamic analysis

Horizontal analysis compares the same items over several years and studies how each one changes from one period to the next. Because it follows the movement of the figures over time, it is called dynamic analysis.

Option (2) structural analysis — Incorrect. Structural analysis is another name for vertical analysis, which studies how the items of one year's statement are made up in relation to a common base.

Option (3) static analysis — Incorrect. Vertical analysis of the statements of one year is static: it looks at a single point or period, not at movement over time.

Option (4) all of the above — Incorrect. Options (2) and (3) describe vertical analysis, so they cannot all be names of horizontal analysis.

NCERT (2026-27 edition):
Tools of Analysis of Financial Statements – “… Comparative Statements: These are the statements showing the profitability and financial position of a firm for different periods of time in a comparative form to give an idea about the position of two or more periods. It usually applies to the two important financial statements, namely, balance sheet and statement of profit and loss prepared in a comparative form. The financial data will be comparative only when same accounting principles are used in preparing these statements. If this is not the case, the deviation in the use of accounting principles should be mentioned as a footnote. Comparative figures indicate the trend and direction of financial position and operating results. This analysis is also known as ‘horizontal analysis’.”