Ph 3 Ip Horizontal Analysis

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FINC225
Horizontal Analysis of Limited Brand Company
Colorado Technical University
January 28, 2013
Lucille Roxanne Pizzolo-Klein
Dr. Ken Nwoke

Horizontal Analysis
Horizontal analysis is a comparison of ratios and line items from a company to see and forecast how the business is doing and where improvements can be made. It shows overall where problems may lie or where corrections need to be or have been implemented.

I did my horizontal analysis on The Limited Brand Company and my results showed that the assets for the company were down by 1% but the liabilities were up by 1% thereby balancing and explaining the ups and downs. The net sales were down by 6% and the cost of goods also down by double that allowing for there to still be a profit of 5%.

By following the ratios for a company you can tell where the profitability lies and decide whether or not the company would be a safe investment. These numbers are imperative for both managerial and financial accounting so that insiders and outsiders can make informed decisions regarding the status of the business. From a managerial standpoint, reviewing these ratios can show which department is doing well and acting productively and where some improvement and spending can be altered. Management becomes very interested in observing the analysis when bonuses are an incentive based on their own performance in improving the company’s bottom line. Investors are naturally interested in knowing before they invest or even for monitoring their investments and staying informed while moving forward.

References
Investors relations. (2012). Retrieved from http://limitedbrands.com
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