Common Size Analysis

This type of report can be very beneficial in the management of a company. Balance sheets can best be reviewed by removing historical data via a Horizontal analysis. Assets, liabilities and owners’ equity can all be scrutinized and compared to determine if any damaging or constructive trends are apparent.

#1. Common-Sized Balance Sheets. Just for FEET, Inc. Balance Sheet Years ending Jan 31st 1997 18.40% 0.00% 3.53% 45.97% 1.50% 69.40% 21.08% 8.05% 1.46% 100.00% 20.22% 11.41% 2.07% 0.30% 0.72% 34.73% 5.48% 40.21% 0.00% 48.76% 11.03% 59.79%

Horizontal analysis is essentially an analysis on the trend of the financials of the company. It shows changes in the amounts of the amounts over a period of time. In the financial statement provided, the horizontal analysis is between years six and seven, and years seven and eight; respectively. When analyzing the income statement provided with the task, several strengths and weaknesses are very apparent. They will be broken down individually and analyzed separately. Horizontal analysis is calculated by using the formula below ("Horizontal Analysis," n.d.)

A horizontal analysis can be defined as “the study of percentage changes in comparative statements” (Charles T. Horngren, 2008, p. 746). It is useful in determining a company’s financial stability. This section will analyze Competition Bikes Incorporated’s (CBI) percentage changes from years 6 to 7 and then 7 to 8. The report will include an analysis of CBI’s comparative income statement and balance sheet.

  The money statements is used by both external and internal users including investors, creditors, managers, and executives staff. There are several analysis that are used in many ways of Horizontal Analysis and Vertical Analysis. Horizontal Vertical compares in specific items over number of accounting period that many people uses to balance their information. There are compared in different ways of in Absolute Dollars and by percentage ratios that helps with calculations. Then the Vertical Analysis which compares each separate figure that shows in Financial statements. The explanation of the analysis through income statements and using the balance sheet The analyze information helps many businesses and owners to make good business decisions so understanding the analysis will be great importance to how people compares the analysis.

The balance sheet (BS) is significant to a business due to its ability to provide a “snapshot” of a company’s assets and liabilities at any given time. This financial document is a cursory representation of a business’s health. The use of comparative BS whether it be yearly, quarterly, or monthly provides the interested parties a tool to observe trends that are positive, negative, or neutral to a company’s financial health (Finkler, Jones, and Koyner,2013) .

PepsiCo’s net income in 2004 was $4,212.00 or 14.3%, in 2005 the net income dropped by 1.8% bringing the net income to 12.5%. Both companies net income percentage decreased in 2005, though not by detrimental amounts it still is necessary to understand the financial status of both companies. Vertical analysis is a method of evaluating a company’s financial performance over a single accounting period, this helps to identify product items who’s sales may be increasing or decreasing at a faster rate than others, having the ability to perform this analysis throughout the year simplifies the process of product increase or decrease.

A vertical and horizontal analysis of each company's balance sheet and income statement in this particular case will be enlightening. A vertical analysis will for instance shed some light on how revenue is being used. In this case, each component of the companies' financial statements will be converted into a percentage of a key component of either the balance sheet or the income statement. A special common size balance sheet and income statement will be utilized to ease comparison. The

Separately, the balance sheet reports a company’s financial position while the income statement reports a company’s fiscal year profits and losses. The balance sheet measures a company’s financial position by reporting its assets, liabilities, and owner’s (shareholder’s) equity. The income statement measures a company’s financial performance by reporting its revenues, expenses, and net income/loss. When combined, they serve two vital purposes: (1) expand the accounting equation and (2) enable analysis using ratios to determine industry position or potential material misstatements. The increase or decrease in owner’s (shareholder’s) equity on the balance sheet is a direct result of the net

Simply put, the horizontal analysis compares specific line items on a financial statement to a base year and computes a percentage change for the year in question. Our horizontal analysis here uses 2013 as the base year and looks at subsequent change relative to that. On the income statement, we should be cheered Amazon’s strong 43.72% growth in net sales between 2013 and 2015, which

Accounting helps to measure an organizations activities, process data into reports, and translate the results to decision makers. Financial statements and reports help to present the company to the public in financial terms. The information on these data statements can used to evaluate the company through vertical and horizontal analysis. Vertical analysis is the proportional analysis of a financial statement. Normally, vertical analysis is done with a financial statement over a period of time. When using vertical analysis, a line item on a financial statement is listed as a percentage of another item (Harrison, 2015). A horizontal analysis is the comparison of information or ratios over a series of reporting periods. Horizontal analysis helps investors and analysts to control how a company has grown over time. Analysts and investors could use horizontal analysis to compare a company's growth rates in relation to its competitors and industry.

Horizontal analysis is also known as trend analysis. It is a financial statement analysis method that demonstrates changes in the amounts of equivalent financial statement items over a period of time. Moreover, it is a useful tool in order to assess the trend situations in an effective and a more comprehensive manner. It involves the statements for two or more periods to evaluate trend situations. This analysis may be conducted for income statement, balance sheet, schedules of current & fixed assets, and statement of retained earnings of an organization (Wainwright, 2012).

Horizontal analysis is the comparison of a company’s historical financial information over a specific period of time. The analysis helps to determine whether an increase or decrease has taken place in particular areas of the financial performance. A horizontal analysis of Wynn’s income statement and balance sheet provides insight into their performance from 2013 and 2014. During this time period, Wynn’s assets increased 8%. Much of this growth was the result of a 37% increase in their investment securities and a 16% increase in their prepaid expenses. However, the firm did experience a 10% decrease in their cash and cash equivalents. The most drastic change occurred in the firm’s stockholder’s equity, which increased nearly 60%. This drastic increase is likely due to the increase in retained earnings over the same period, which increased from $66 million to $164 million. The horizontal analysis of the firm’s consolidated statements of income reveals mostly insubstantial. Wynn

 an analysis of the company’s accounting policies that are likely to affect interpretation of its financial reports (at least 3 policies)

Horizontal analysis is the comparison of financial information in an organization’s statements over a certain period of time, while vertical analysis compares the percentage of each item in accounts, assets, and debt financing on a balance sheet or income statement.