Management accounting
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This document discusses techniques for analyzing financial statements, including horizontal analysis, vertical analysis, and how each applies to balance sheets and income statements. Horizontal analysis examines changes in financial statement items over time, while vertical analysis expresses items as percentages of a key component to compare proportions. Both help evaluate trends and compare financial statements from different periods.
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Management accounting
- 2. Balance Sheet & Income Statement Horizontal analysis Vertical Analysis
- 4. Horizontal Analysis Horizontal analysis is a financial statement analysis technique that shows changes in the amounts of corresponding financial statement items over a period of time. It is a useful tool to evaluate the trend situations.
- 5. VerticalAnalysis Vertical analysis sometimes is referred to as common-size analysis because all of the amounts for a given year are converted into percentages of a key financial statement component.