What are the two traditional methods of percentage analysis of financial statements?

The two traditional methods of percentage analysis of financial statements are horizontal and vertical analysis.

Horizontal analysis involves comparing financial data across multiple periods, which allows for the evaluation of trends over time. This method is useful in identifying growth patterns, performance changes, or any anomalies that may require further research. By analyzing percentage changes in account balances from one period to another, stakeholders can better understand the organization's financial trajectory.

Vertical analysis, on the other hand, involves analyzing each line item in a financial statement as a percentage of a base item. For example, in an income statement, each item may be expressed as a percentage of total revenue, while in a balance sheet, it could be expressed as a percentage of total assets. This approach enables straightforward comparisons across companies of different sizes or within the same company over various periods, providing insights into the relative proportions of each financial statement component.

While the other options include elements related to financial analysis, they do not accurately reflect the two traditional methods specifically recognized in percentage analysis.