What is horizontal analysis?

In business, horizontal analysis concerns the type of basic analysis in which a financial analyst uses certain financial data to assess the performance of the company over time. The analyst compares the same items or ratios for a particular company for a certain period of time to assess the growth of the company during this time. Horizontal analysis can also be performed for multiple companies in the same industry to assess the performance of society in relation to its competitors. It can be line items such as expenditure items, or it may be a ratio. The ratio is determined by comparing two or more items, for example by distributing expenditure by net sale to determine the operating ratio.

horizontal analysis can be done on a quarterly non -corners. Performance can be compared to the previous period or in the case of quarterly analysis to the same quarter in the previous year. If the analyst compares the same information from one quarter dby the second, referred to as a quarter to quarter, as in "Q1 to a quarter of a quarter increased by 10 percent." If the comparison in the same quarter in the previous year is referred to as a quarter, such as quarterly, is usually more than quarterly, such as it is quarterly like it is like it is like it is like it is like it is like it is like more than Quartur. It reflects a change compared to the same quarter ago.

The values ​​of the horizontal analysis consist of its usefulness in comparing the results of one company over time to determine whether its financial situation is improving. It is also useful for comparing the results of multiple companies in the same industry to determine which company has the best performance over time. It is the most useful in comparison of the same industry because metrics like gross margins may be very different from oneabout the sector to the other.

Unlike horizontal analysis, vertical analysis applies to representation of assets, obligations and shares as a percentage of the whole. These three main categories of balance sheet are added and each is expressed as a percentage of the total number it represents. Vertical analysis may be useful in comparing companies of different sizes because it makes it easier to see which company has a greater percentage of obligations unlike its own capital or which company has more assets in relation to obligations and equity.