
Concept Introduction:
Financial Statement analysis is done using the components of financial statement. These components are
Vertical Analysis:
Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.
Horizontal Analysis:
Horizontal Analysis is used to analyses the trend of a particular item. Horizontal Analysis is done for particular items for different periods for example analysis of trend of sales for several years is done using the horizontal analysis.
Requirement-a:
To Indicate:
Limitation of ratio analysis while examining companies using different accounting system
Concept Introduction:
Financial Statement analysis is done using the components of financial statement. These components are Balance sheet, Income statement, Statement of Cash flows etc. Annual report of a company contains financial statement of that year and previous year for comparison. If the company has subsidiaries or segments, the financial statement shall be consolidated for whole business of the company.
Vertical Analysis:
Vertical Analysis is used to analyses the % of items in statement for a particular period as the % of total amount. Vertical Analysis is done for particular period for different items. For example analysis of % of assets as % of Total assets for a particular year is done using the Vertical analysis.
Horizontal Analysis:
Horizontal Analysis is used to analyses the trend of a particular item. Horizontal Analysis is done for particular items for different periods for example analysis of trend of sales for several years is done using the horizontal analysis.
Requirement-a:
To Indicate:
Advantages of vertical and horizontal analysis while examining companies using different accounting system

Want to see the full answer?
Check out a sample textbook solution
Chapter F Solutions
Fundamental Accounting Principles
- Critically analyse the role of financial reporting in investment decision-making,emphasizing the qualitative characteristics that enhance the usefulness of financialstatements. Discuss how financial reporting influences both investor confidence andregulatory decisions, using relevant examples.arrow_forwardHelp need!!arrow_forwardAnswer please correarrow_forward
- Answer should be coarrow_forwardSolve quiarrow_forwardAssess the role of modern accounting theories in guiding research in accounting.Discuss how contemporary theories, such as stakeholder theory, legitimacy theory, andbehavioral accounting theory, shape research questions, hypotheses formulation, andempirical analysis.arrow_forward
- Need answerarrow_forwardDefine research methodology in the context of accounting theory and discuss theimportance of selecting appropriate research methodology. Evaluate the strengths andlimitations of quantitative and qualitative approaches in accounting research.arrow_forwardCritically evaluate the progress and challenges in achieving a single set of globalaccounting standards. Discuss the benefits and drawbacks of globalization inaccounting, providing relevant examples.arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





