Ratio, Vertical, and Horizontal Analyses
XACC/280
May 8, 2012

Analyzing financial statements can help a company find out important financial information about itself and other competitors in the industry. There are three important tools that evaluate a company’s liquidity, profitability, and solvency. This information is relative to banks, creditors, and for internal gain. There are three commonly used tools to help investigate and generate the results using percentages and ratios.

The horizontal analysis evaluates data from the financial statement over a period of time to generate the data needed for the analysis. The purpose of the analysis is to figure out the increase and decrease in amounts by percentages. This is a tool used to evaluate gains internally.

The vertical analysis is used to show each item on the financial statement as a percentage of a base amount (Weygandt, Kimmel, & Kieso, 2008). Its purpose is to show the relative size of each category on the balance sheet. This method is used to compare a company with others in the same field.

Ratio analysis shows the relationship among a line item chosen from the data on the financial statement (Weygandt, Kimmel, & Kieso, 2008). The results are shown either in a percentage or ratio of the mathematical relationship between the totals. This is also another good tool to compare with the results of other industry peers.

The PepsiCo, Inc.
Current Ratio for 2005:
Formula - Current Assets
Current Liabilities= Current Ratio
10454
9406= 1.11:1
Current Ratio for 2004:
8639
6752= 1.28:9
Vertical Analysis
Formula - Items on Balance Sheet
Total Assets= %
Current Assets10454
Total Assets=31727 = 33%
Formula - Item on Balance Sheet
Total Liabilities with Shareholders Equity = %
Short Term Obligations 2889
Total Liabilities with Shareholders Equity= 31727 = 9%
Horizontal Analysis
Formula -Current Year Amount...

...Ratio, Vertical, and HorizontalAnalyses
Regina Stewart
XACC/280
February 3, 2012
Jose Rodriguez
Ratio, Vertical, and HorizontalAnalyses
A detailed examination of the tools used in financial analysis, in addition to their various functions, is provided within this paper. The current ratio and calculations on the questions are provided herein.
A variety of tools are used to assess the importance of financial data. Frequently used tools of financial statement analysis consist of horizontal analysis, vertical analysis and ratio analysis. These techniques assist in the evaluation of financial statements providing information regarding the financial condition of a business.
Evaluating the data of financial statements over a period of time, is considered horizontal analysis and is primarily used in intracompany comparisons with the purpose of determining an increase or decrease over a period of time.
Vertical analysis expresses individual items in the financial statement in the percentage format of the base amount and is used in comparisons of both intracompany and intercompany. Vertical analysis reflects the comparative size of each category in the balance sheet along with the percentage change in the individual asset, liability, and stockholders’...

...Ratio, Vertical and HorizontalAnalyses
XXXXXXXXXX
XACC/280
XXXXXXXXXX
Ratio, Vertical and HorizontalAnalyses
The three tools of financial statements analysis are Horizontal (trend), Vertical (common size), and Ratio. The first financial statement analysis is horizontal which evaluates the performance of the company from one accounting period to the next. Horizontalanalyses’ are conducted to assess any relative changes in different items over a specified time period. It also indicates the trends of revenues, expenses, and other line items of financial statements over the course of time. Another type of financial statement analysis is vertical which expresses all the different financial statements as a percentage of a base amount. The vertical analysis represents what percentage of an account is responsible in the financial statements. When applying this method on the balance sheet, all of the three major categories account; assets, liabilities, and equity are compared to the total assets. The third financial statement analysis is ratio which expresses the relationship among selected items in financial statements. This relationship is expressed in the form of a percentage, rate, or a proportion. External and internal will use...

...Ratio, Vertical, and HorizontalAnalyses
Heather Wassell
XACC/280
April 7, 2013
University of Phoenix
Ratio, Vertical, and HorizontalAnalyses
Financial statement analysis is the process of examining relationships among financial statement elements and making comparisons with relevant information. There are a variety of tools used to evaluate the significance of financial statement data. Three of the commonly used tools are the ratio analysis, horizontal analysis, and vertical analysis. Ratio analysis is a method of analyzing data to determine the overall financial strength of a business. These ratios are most useful when compared to other ratios such as the comparable ratios of similar businesses or the historical trend of a single business over several business cycles. Horizontal analysis is a type of fundamental analysis in which certain financial data is used to asses a company's performance over a period of time. Horizontal analysis can be assessed on a single company over a period of time, comparing the same items or ratios, or it can be performed on multiple companies in the same industry to assess a company's performance relative to competitors. Vertical analysis is a method of analyzing...

...Ratio, Vertical, and HorizontalAnalyses Checkpoint
Ashlee Kasica
XACC/280
March 2, 2013
Brandi Zuber
Financial statement analysis is the process of examining relationships among financial statement elements and making comparisons with relevant information. There are a variety of tools used to evaluate significance of financial statement data. Three of the most commonly used tools are theratio analysis, horizontal analysis, and vertical analysis (Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008).
Ratio analysis is the method of analyzing data to determine the overall strength of a business. These ratios are most useful when compared to other ratios such as the comparable ratios of similar businesses or the historical trend of a singe business or several business cycles (Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008).
Horizontal analysis is a type of fundamental analysis in which certain financial information is used to asses a company's performance over a period of time. It can be assessed by comparing the same items or ratios or it can be performed on multiple companies in the same industry. This is done to asses a company's performance compared to competitors (Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008)....

...Ratio, Vertical, and HorizontalAnalyses
There are three ways internal and external users of a company can analyze financial statements. They include the vertical analysis, the horizontal analysis, and the ratio analysis (Weygandt, Kimmel, & Kieso, 2008). The vertical analysis is a technique that expresses each financial statement as a percent of a base amount (Weygandt, Kimmel, & Kieso, 2008). Horizontal analysis, or trend analysis, is how one can evaluate the financial statement over a specific period of time (Weygandt, Kimmel, & Kieso, 2008). With the horizontal method, an increase or decrease in assets liabilities or stockholders equity can be determined (Weygandt, Kimmel, & Kieso, 2008). This can be expressed as a percentage or by total amounts, and is primarily used for intercompany comparison (Weygandt, Kimmel, & Kieso, 2008). The ratio analysis utilizes three different comparisons for financial statements such as industry average comparisons, intracompany comparisons, and intercompany comparisons (Weygandt, Kimmel, & Kieso, 2008). A ratio conveys the mathematical relationship by means of a percentage, a rate or a proportion (Weygandt, Kimmel, & Kieso, 2008). It also measures a company’s financials in terms of liquidity, profitability, and solvency (Weygandt, Kimmel, & Kieso, 2008)....

...years, or even different companies accounts. Two of the tools of financial statement analysis are called vertical analysis and horizontal analysis. Much like the definitions of vertical and horizontal, these two analyses are similar, but also have striking differences. In this paper I will provide you with information regarding the two tools, vertical and horizontal analysis, and how comparing them is applied to two big businesses called PepsiCo, Incorporated and Coca-Cola Company.
When referring to vertical analysis, we are referring to when a total percentage is calculated for one financial statement. As defined on “Accounting Coach” (2012), “A type of financial analysis involving income statements and balance sheets. All income statement amounts are divided by the amount of net sales so that the income statement figures will become percentages of net sales. All balance sheet amounts are divided by total assets so that the balance sheet figures will become percentages of total assets,” (Dictionary). Using vertical analysis is very helpful when comparing a company’s percentages between statements, (Price, Haddock, & Brock, para. Vertical analysis of financial statements, 2007). It can also be helpful when comparing numbers of two companies that are within the same trade; such as the companies being compared in this paper:...

...Define and differniate between vertical integration and horizontal integration?
Vertical Integration :- It describes a style of management control. Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. It is contrasted with horizontal integration.Vertical integration is one method of avoiding the hold-up problem. A monopoly produced through vertical integration is called a vertical monopoly, although it might be more appropriate to speak of this as some form of cartel.
Two types of vertical integration:-
Backward Vertical integration when it controls subsidiaries that produce some of the inputs used in the production of its products. For example, an automobile company may own a tire company, a glass company, and a metal company. Control of these three subsidiaries is intended to create a stable supply of inputs and ensure a consistent quality in their final product.
Forward Vertical integration when it controls distribution centers and retailers where its products are sold.
Horizontal Integration :- It describes a type of ownership and control. It is a strategy used by a business or corporation that seeks to sell a type of product in numerous...

...9/15/13
What is the difference between vertical analysis and horizontal analysis? | AccountingCoach.com Q&A
Search over 1,000 accounting topics:
Search our Site
Home Login About 1,500 Testimonials
Accounting Topics
Test Yourself
Bookkeeping
Q&A
Careers
Dictionary
Pro Materials
Q&A Home
Q&A by Topic
Suggest a Question
Subscribe via RSS
What is the difference between vertical analysis andhorizontal analysis?
Vertical analysis reports each amount on a financial statement as a percentage of another item. For example, the vertical analysis of the balance sheet means every amount on the balance sheet is restated to be a percentage of total assets. If inventory is $100,000 and total assets are $400,000 then inventory is presented as 25 ($100,000 divided by $400,000). If cash is $8,000 then it will be presented as 2 ($8,000 divided by $400,000). The total of the assets will now add up to 100. If the accounts payable are $88,000 they will be presented as 22 ($88,000 divided by $400,000). If owner’s equity is $240,000 it will be presented as 60 ($240,000 divided by $400,000). The restated amounts from the vertical analysis of the balance sheet will be presented as a common-size balance sheet. A commonsize balance sheet allows you to compare your company’s balance sheet to another company’s balance sheet or to the average for its industry....