TOPIC 5, HORIZONTAL AND VERTICAL ANALYSIS

Question 1

the company compares their own
financial statements for the current period with their financial
statements from the previous period.

Answer 1

horizontal analysis

Question 2

TO CONDUCT HORIZONTAL ANALYSIS, COMPARE BOTH
ACCOUNTING PERIODS

Answer 2

Amount Increase (Decrease) = current year – previous year

Percentage Increase (Decrease) = amount/previous year

Question 3

companies express items of a certain
financial statement as a percentage of a given base amount.
For example, items on a Balance Sheet are normally
compared to the total assets of the company for that given
year. Items in an Income Statement are normally compared
to the Net Sales for that given accounting period.

Answer 3

vertical analysis