Horizontal analysis is a percentage method of analyzing financial statements whereby each item on the statement is expressed as a percentage of a base amount. For balance sheets, the base is assets, and for income statements, the base is net sales.

Question

Horizontal analysis is a percentage method of analyzing financial statements whereby each item on the statement is expressed as a percentage of a base amount. For balance sheets, the base is assets, and for income statements, the base is net sales.​

Quizplus · Accepted Answer

Horizontal analysis compares financial data across multiple periods by calculating the absolute and percentage changes for each line item from one period to the next, rather than expressing each item as a percentage of a base amount.

Horizontal Analysis Is a Percentage Method of Analyzing Financial Statements