Two common approaches to using ratio analysis are:

Question

Quizplus · Accepted Answer

The two common approaches to using ratio analysis are horizontal and vertical analysis. Horizontal analysis compares financial data over a period of time, such as year-over-year or quarter-over-quarter, to identify trends or changes. Vertical analysis, on the other hand, compares financial data within a single period or snapshot in time, such as the composition of assets or liabilities on a balance sheet. These two approaches provide different insights into a company's financial performance and can be used together for a more comprehensive analysis.

Two Common Approaches to Using Ratio Analysis Are