Which of the following statements regarding horizontal analysis is not true?
A. In horizontal percentage analysis, a financial statement line item is expressed as a percentage of the previous balance of the same item.
B. Horizontal analysis attempts to eliminate the materiality problem of comparing firms of different sizes.
C. A horizontal analysis of cost of goods sold on the income statement includes dividing net income by total revenue.
D. Percentage analysis involves computing the percentage relationship between two amounts.
Answer: C
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