What analysis method involves examining reports over three or more years?

The method that involves examining reports over three or more years is trend analysis. This analytical approach focuses on assessing financial data over a specific period, often several years, to identify patterns, trends, and changes in financial performance. By looking at multiple years of data, trend analysis helps stakeholders understand how a company's financial position has evolved over time and can aid in forecasting future performance.

In practice, trend analysis can uncover significant insights, such as year-over-year revenue growth or declines in expenses, allowing for strategic decision-making based on observed patterns. This methodology is especially useful for long-term strategic planning and investment evaluation, as it provides a broader context than simply reviewing a single year’s data.

Vertical analysis, on the other hand, looks at financial statements as a percentage of a base figure within the same period, while horizontal analysis compares figures across two specific periods to highlight growth or reduction. Comparative analysis involves directly comparing financial statements from different companies or periods without the specific long-term focus seen in trend analysis.