Trend Analysis:

In the relative and common size financial statements, the data cannot be identified whether it is abnormal or normal as an essential standard is absent.  To conquer this restrictions trend analysis can be used to analyze business data.  Below this method, each item's worth over a phase of time is collected and an arithmetical relationship is ascertained. Typically, the first year is taken as the base year. In further words, under trend analysis, a base year is recognized and the values of a given item in following years are expressed as a percentage of the base year value. The stand year value is typically defined as 100, for ease of understanding or is expressed as a trend ratio.