What is the difference between horizontal and vertical analysis of financial statements?

Accounting Jan 22, 2021

Expert Solution

Horizontal analysis is the percentage analysis of increases and decreases in corresponding statements. The percent change in the cash balances at the end of the pre-ceding year from the end of the current year is an example. Vertical analysis is the percentage analysis showing the relationship of the component parts to the total in a single statement. The percent of cash as a portion of total assets at the end of the current year is an example.

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