Explanation:

• Possibility of making Inter-firm Comparison: helps the analyst to make a proper comparison between the two or more firms over a period of time.It helps to understand the strength or weakness of a particular firm in comparison with other related firm in the industry.
• Usefulness: Trend analysis (in percentage) is found to be more effective in comparison with the absolutes figures/data on the basis of which the management can take the decisions.
• Useful for Comparative Analysis: Trend analyses is very useful for comparative analysis of date in order to measure the financial performances of firm over a period of time and which helps the management to take decisions for the future i.e. it helps to predict the future.
• Measuring Liquidity and Solvency: Trend analysis helps the analyst/and the management to understand the short-term liquidity position as well as the long-term solvency position of a firm over the years with the help of related financial Trend ratios.
• Measuring Profitability Position: Trend analysis also helps to measure the profitability positions of an enterprise.