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
FUND.ACCT.PRIN.(LOOSELEAF)-W/ACCESS
- Can you help me solve this accounting problem with the correct methodology?arrow_forwardHow can I solve this financial accounting problem using the appropriate financial process?arrow_forwardDavis Company reported an increase of $350,000 in its accounts receivable during the year 2023. The company's statement of cash flows for 2023 reported $980,000 of cash received from customers. What amount of net sales must Davis have recorded in 2023?arrow_forward
- Roosevelt Equipment Ltd. manufactures industrial cranes. The standard for a specific crane model calls for 30 direct labor hours at $22 per direct labor hour. During a recent period, 400 cranes were produced. The labor rate variance was zero, and the labor efficiency variance was $8,800 unfavorable. How many actual direct labor hours were worked?arrow_forwardNolan Industries assigns overhead costs to jobs on the basis of 140% of direct labor costs. The job cost sheet for Job 627 includes $31,200 in direct materials cost and $18,500 in direct labor cost. A total of 2,500 units were produced in Job 627. Required: a. What is the total manufacturing cost assigned to Job 627? b. What is the unit product cost for Job 627?arrow_forwardCarlisle Services reported revenues of $78,000, expenses of $72,500, and dividends of $5,800 for the month ended February 28, 2024. Carlisle Services experienced a net income or net loss of what amount?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:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education