Vertical Analysis: Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount. Use the following formula to calculate vertical analysis percentage: Formula: Vertical analysis percentage = ( Specific item Base amount ) ×100 This analysis is otherwise called as common-size statement or comparative statements. Trend Analysis: Trend analysis is one form of horizontal analysis. It helps the user to know the changes that has been occurred for several years. When trend analysis is done, firstly certain value is taken as a base and further, other figures are matched to the proportion of the base figure. Formula: Trend percentage = ( Any period amount Base period amount ) To determine: the difference between comparative statements and trend analysis.
Vertical Analysis: Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount. Use the following formula to calculate vertical analysis percentage: Formula: Vertical analysis percentage = ( Specific item Base amount ) ×100 This analysis is otherwise called as common-size statement or comparative statements. Trend Analysis: Trend analysis is one form of horizontal analysis. It helps the user to know the changes that has been occurred for several years. When trend analysis is done, firstly certain value is taken as a base and further, other figures are matched to the proportion of the base figure. Formula: Trend percentage = ( Any period amount Base period amount ) To determine: the difference between comparative statements and trend analysis.
Solution Summary: The author explains the difference between comparative statements and trend analysis. Comparative statements are used to determine the changes that occur between dates and periods.
Vertical Analysis: Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount. Use the following formula to calculate vertical analysis percentage:
This analysis is otherwise called as common-size statement or comparative statements.
Trend Analysis: Trend analysis is one form of horizontal analysis. It helps the user to know the changes that has been occurred for several years. When trend analysis is done, firstly certain value is taken as a base and further, other figures are matched to the proportion of the base figure.
Formula:
Trendpercentage=(AnyperiodamountBaseperiodamount)
To determine: the difference between comparative statements and trend analysis.
In your opinion, what is the advantage of using comparative statements for financial analysis rather than statements for a single date or period?
In your opinion, what are the top two most important ratios when analyzing the financial statements? Explain.
Distinguish between ratio analysis and percentage analysis relative to the interpretation of financial statements. What is the value of these two types of analyses?
What purposes are served by a comparative study of financial statements?