Ratio, Vertical and Horizontal Analyses
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XACC/280
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Ratio, Vertical and Horizontal Analyses
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. Horizontal analyses’ 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 this method in order to gauge the growth and or direction the company is going in. Whether it is a good idea in invest money in them or let them borrow money.

PepsiCo.
Appendix A:
Current ratio for 2005:
$10,454 (Current Assets)
$ 9,406 (Current Liabilities) $10,454 divided by $9,406 is equaled to 1.11% Current ratio for 2004: $8,639 (Current Assets) $6,752 (Current Liabilities) $8,639 divided by $6,752 is equaled to 1.28%

Vertical analysis for 2005:
Current Assets divided by Total Assets 10,454 / 31,727 = .3294 or 32.9% Vertical analysis for 2004:
Current Assets divided by Total Assets 8,639 / 27,987 = .3086 or 30.9% Horizontal analysis:
Current Assets 2005 divided by Current Assets 2004 10,454 / 8,639 = 1.21 or...

...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,...

...Ratio, Vertical, and HorizontalAnalysesXACC/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...

...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...

...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:...

...XACC/280
Week 7 Checkpoint: Ratio, Vertical & Horizontal Analysis
Jennifer Brooks
3/5/2010
Three commonly used tools of financial system analysis are the horizontal analysis, the vertical analysis, and the ratio analysis. The horizontal analysis is a technique used for evaluating financial statement data over a period of time. This serves to show performance increase and decrease and may be expressed as an amount or percentage. The horizontal analysis is useful in comparing the results of a company over time to determine whether its financial situation is improving. Vertical analysis is a method in which each entry for each of the categories in a balance sheet is represented as a proportion of the total account. Vertical analysis refers to assets, liabilities and equities as a percentage as a whole. This analysis can be useful in comparing different sized companies to see which company has a greater percentage of liabilities, assets or equities. Ratio analysis is the calculation and comparison of ratios which are in the company’s financial statements. Ratio analysis can determine a company’s financial condition, its operations and whether the company is worth investing in.
PepsiCo, Inc.
Current ratio for 2005 = 31,727 (total assets) /...

...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 the ratio 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....

...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)....

...next concept which is vertical and horizontal analysis. By taking a step back and going over the ratio analysis which is composed of the three main characteristics, we are able to see what has happened during the time period we compare with. Hence us making our intelligent investment decision.
Going back, ratio analysis is where we divide two numbers in order to get a percentage which we will compare to the competitor. First characteristic is liquidity. This is where we see the company paying their debts, and on time. This is very similar to an individual person’s credit score. Are they paying their bills? This shows financial responsibility and that is a very important component in investments. The information is typically shown as a ratio or percentage of the liquid assets. The higher the ratio the bigger the safety margin is in which the corporation will fulfill their debts. You wouldn’t rent a home to someone with bad credit. Nor would you loan someone money if they had a bad tendency to not be responsible with money. Going back to business mind state, we can look at the potential ability to turn a good or service into profit. This is crucial to investing. It’s also crucial to compare companies within the same industry. It seems logical initially but there are ratios and formulas that are used that operate most efficiently when comparison is done within similarities. So,...