To Indicate: The difference between horizontal and vertical analysis of financial statement data

Question

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Answer 1

Question

Chapter 14, Problem 1Q

Horizontal analysis is a method of analyzing the financial statements in which the changes in the values of corresponding financial statement items of different periods are compared. Vertical analysis shows the relative proportion of the different financial statement items with respect to an item which is taken as a base for calculation.

To determine

To Indicate:

The difference between horizontal and vertical analysis of financial statement data

Expert Solution & Answer

Explanation of Solution

The points of difference between the two analysis methods are:

In Horizontal method, values of corresponding financial statement items of different periods are compared whereas in Vertical method, the financial statement items are shown as a percentage of base items to make decisions.
Horizontal method compares the changes in the corresponding value of items over a period whereas Vertical method compares the change in the relative proportion of items in financial statements.
Horizontal method is used to compare an organization’s current performance with its performance in the past whereas Vertical method compares an organization’s performance with other organizations.

Conclusion

Thus, the difference between Horizontal and Vertical analysis

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Students have asked these similar questions

On 10/6/2024, company A sells goods to Customer C for €20,000 with an agreed credit of two months. On 31/12/2024, in the context of investigating the collectability of its receivables, the company estimates that it will only collect €10,000 from customer C and forms a provision for doubtful debts for the remaining amount. Finally, on 30/3/2025, company A receives from customer C the amount of: a. €9,000 b. €11,000. You are requested to comment on the impact of the above collection cases a. 9000 b. 11,000 on the income statement for fiscal year 2025, justifying your position.

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Answer 2

Question

Chapter 14, Problem 1Q

Horizontal analysis is a method of analyzing the financial statements in which the changes in the values of corresponding financial statement items of different periods are compared. Vertical analysis shows the relative proportion of the different financial statement items with respect to an item which is taken as a base for calculation.

To determine

To Indicate:

The difference between horizontal and vertical analysis of financial statement data

Expert Solution & Answer

Explanation of Solution

The points of difference between the two analysis methods are:

In Horizontal method, values of corresponding financial statement items of different periods are compared whereas in Vertical method, the financial statement items are shown as a percentage of base items to make decisions.
Horizontal method compares the changes in the corresponding value of items over a period whereas Vertical method compares the change in the relative proportion of items in financial statements.
Horizontal method is used to compare an organization’s current performance with its performance in the past whereas Vertical method compares an organization’s performance with other organizations.

Conclusion

Thus, the difference between Horizontal and Vertical analysis

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Answer 3

Question

Chapter 14, Problem 1Q

Horizontal analysis is a method of analyzing the financial statements in which the changes in the values of corresponding financial statement items of different periods are compared. Vertical analysis shows the relative proportion of the different financial statement items with respect to an item which is taken as a base for calculation.

To determine

To Indicate:

The difference between horizontal and vertical analysis of financial statement data

Expert Solution & Answer

Explanation of Solution

The points of difference between the two analysis methods are:

In Horizontal method, values of corresponding financial statement items of different periods are compared whereas in Vertical method, the financial statement items are shown as a percentage of base items to make decisions.
Horizontal method compares the changes in the corresponding value of items over a period whereas Vertical method compares the change in the relative proportion of items in financial statements.
Horizontal method is used to compare an organization’s current performance with its performance in the past whereas Vertical method compares an organization’s performance with other organizations.

Conclusion

Thus, the difference between Horizontal and Vertical analysis

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Answer 4

Question

Chapter 14, Problem 1Q

Horizontal analysis is a method of analyzing the financial statements in which the changes in the values of corresponding financial statement items of different periods are compared. Vertical analysis shows the relative proportion of the different financial statement items with respect to an item which is taken as a base for calculation.

To determine

To Indicate:

The difference between horizontal and vertical analysis of financial statement data

Expert Solution & Answer

Explanation of Solution

The points of difference between the two analysis methods are:

In Horizontal method, values of corresponding financial statement items of different periods are compared whereas in Vertical method, the financial statement items are shown as a percentage of base items to make decisions.
Horizontal method compares the changes in the corresponding value of items over a period whereas Vertical method compares the change in the relative proportion of items in financial statements.
Horizontal method is used to compare an organization’s current performance with its performance in the past whereas Vertical method compares an organization’s performance with other organizations.

Conclusion

Thus, the difference between Horizontal and Vertical analysis

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 14, Problem 1Q

Horizontal analysis is a method of analyzing the financial statements in which the changes in the values of corresponding financial statement items of different periods are compared. Vertical analysis shows the relative proportion of the different financial statement items with respect to an item which is taken as a base for calculation.

To determine

To Indicate:

The difference between horizontal and vertical analysis of financial statement data

Expert Solution & Answer

Explanation of Solution

The points of difference between the two analysis methods are:

In Horizontal method, values of corresponding financial statement items of different periods are compared whereas in Vertical method, the financial statement items are shown as a percentage of base items to make decisions.
Horizontal method compares the changes in the corresponding value of items over a period whereas Vertical method compares the change in the relative proportion of items in financial statements.
Horizontal method is used to compare an organization’s current performance with its performance in the past whereas Vertical method compares an organization’s performance with other organizations.

Conclusion

Thus, the difference between Horizontal and Vertical analysis

Answer 6

Chapter 14, Problem 1Q

Horizontal analysis is a method of analyzing the financial statements in which the changes in the values of corresponding financial statement items of different periods are compared. Vertical analysis shows the relative proportion of the different financial statement items with respect to an item which is taken as a base for calculation.

To determine

To Indicate:

The difference between horizontal and vertical analysis of financial statement data

Expert Solution & Answer

Explanation of Solution

The points of difference between the two analysis methods are:

In Horizontal method, values of corresponding financial statement items of different periods are compared whereas in Vertical method, the financial statement items are shown as a percentage of base items to make decisions.
Horizontal method compares the changes in the corresponding value of items over a period whereas Vertical method compares the change in the relative proportion of items in financial statements.
Horizontal method is used to compare an organization’s current performance with its performance in the past whereas Vertical method compares an organization’s performance with other organizations.

Conclusion

Thus, the difference between Horizontal and Vertical analysis

Answer 7

Chapter 14, Problem 1Q

Horizontal analysis is a method of analyzing the financial statements in which the changes in the values of corresponding financial statement items of different periods are compared. Vertical analysis shows the relative proportion of the different financial statement items with respect to an item which is taken as a base for calculation.

To determine

To Indicate:

The difference between horizontal and vertical analysis of financial statement data

Answer 8

Expert Solution & Answer

Explanation of Solution

The points of difference between the two analysis methods are:

In Horizontal method, values of corresponding financial statement items of different periods are compared whereas in Vertical method, the financial statement items are shown as a percentage of base items to make decisions.
Horizontal method compares the changes in the corresponding value of items over a period whereas Vertical method compares the change in the relative proportion of items in financial statements.
Horizontal method is used to compare an organization’s current performance with its performance in the past whereas Vertical method compares an organization’s performance with other organizations.