Financial Statement Analysis: Horizontal and Vertical Techniques

Silva Corporation reported net sales of $240,000, $420,000, and $540,000 in the years 2020, 2021, and 2022 respectively. If 2020 is the base year, what is the trend percentage for 2022?

225%

Horizontal analysis is also called

trend analysis.

A technique for evaluating a series of financial statement data over a period of time is

horizontal analysis.

Moon Beam, Inc. reported the following income statement data (in millions) net sales, $180; cost of goods sold, $120; and operating expenses, $33. Using vertical analysis, what percentage is assigned to cost of goods sold?

67%

In vertical analysis, the base amount for each income statement item is

net sales.

The formula for horizontal analysis of changes since the base period is the current year amount

minus the base year amount divided by the base year amount.

Silva Corporation reported net sales of $240,000, $420,000, and $540,000 in the years 2010, 2011, and 2012 respectively. If 2010 is the base year, what is the trend percentage for 2012 in relation to the base year?

225%.

Comparisons of financial data made within a company are called

intracompany comparisons.

In performing a vertical analysis, the base for prepaid expenses is

total assets.

Comparisons can be made on all of the following bases except

all of these options are bases for comparison.

Horizontal analysis

cannot be applied if base year has no value.