Horizontal Analysis

Horizontal analysis is a type of financial analysis that compares financial statements over time to identify trends and patterns. It is also known as trend analysis or time-series analysis.

Horizontal analysis is used to identify changes in a company's financial performance over time. This can help investors and analysts to understand how the company is performing and to make predictions about its future performance.

Horizontal analysis is performed by comparing the financial statements of a company for two or more periods. The statements are typically compared on a line-by-line basis, and the changes in the figures are expressed as percentages.

For example, a company's balance sheet might be compared from year to year to see how its assets, liabilities, and equity have changed. The income statement might be compared to see how its revenue, expenses, and net income have changed.

Horizontal analysis can also be used to compare a company's financial statements to those of its competitors. This can help investors and analysts to see how the company is performing relative to its peers.

Horizontal analysis is a valuable tool for financial analysis. It can help investors and analysts to identify trends and patterns in a company's financial performance, and to make predictions about its future performance.

Here are some of the benefits of horizontal analysis:

* It can help investors and analysts to identify companies that are growing or declining.
* It can help investors and analysts to identify companies that are more or less profitable than their peers.
* It can help investors and analysts to identify companies that are taking on more or less debt.
* It can help investors and analysts to identify companies that are generating more or less cash flow.

Horizontal analysis is a relatively simple and straightforward technique. However, it can be very effective in helping investors and analysts to understand a company's financial performance and to make predictions about its future performance.