Horizontal analysis is a way of making a comparison of financial statements of two years in which one year is taken to be the base year and the comparison is done with the like items and results are given in terms of percentage. Vertical analysis is a way of comparison of two items in the respective statement. This means that every item of balance sheet is being compared with the total assets of the company and every item of income statement is being compared with the total sales of the period of the company. To prepare: The common size income statements which are to be used for both vertical and horizontal analysis for 2017 − 2019 .

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Chapter 12, Problem 97.1C

To determine

Concept introduction:

Horizontal analysis is a way of making a comparison of financial statements of two years in which one year is taken to be the base year and the comparison is done with the like items and results are given in terms of percentage.

Vertical analysis is a way of comparison of two items in the respective statement. This means that every item of balance sheet is being compared with the total assets of the company and every item of income statement is being compared with the total sales of the period of the company.

To prepare:

The common size income statements which are to be used for both vertical and horizontal analysis for 2017−2019.

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