Topic 12 - Financial Statement Analysis & Interpretation Flashcards
1
Q
What is Horizontal Analysis?
A
It is comparing a companies current years figures to its previous years figures (going across (horizontally) the page).
2
Q
What is Vertical Analysis?
A
Is converting everything in one particular year to a percentage of its base. E.g., the Income Statements base is Revenue which is 100% and the Balance Sheets base is Total Assets which is 100%.
3
Q
What is Common Sized Financial Statements?
A
It is the Vertical Analysis of 2 different companies. Everything is converted to a percentage which means we can compare 2 companies of different sizes.
