Horizontal analysis makes comparisons of numbers or amounts in time while vertical analysis involves displaying the numbers as percentages of a total in order to compare them. Both are useful financial analysis techniques that calculate relationships between figures in balance sheets and income statements.Continue Reading
Horizontal analysis, or trend analysis, shows period-to-period changes in corresponding amounts on at least two comparable financial statements. It is useful in balance sheets, income statements and retained earning statements.
Vertical analysis is also called common-size analysis. It shows each amount as a comparable percentage of the base figure, which is usually the total of the assets or liabilities. Vertical analysis is useful in analyzing sales figures, operating costs and income tax.Learn more about Data Graphs