Glory Horizontal Trend Analysis
Horizontal or trend analysis is used to spot and evaluate trends over a specific period of time.
Horizontal trend analysis. For instance instead of creating a balance sheet or income statement for one specific period of. The amounts from past financial statements will be restated to be a percentage of the amounts from a base year. This method of analysis is also known as trend analysis.
It looks as though gross profit margin may be declining. It looks as though gross profit margin may be declining. Trend analysis is the evaluation of financial performance based on a restatement of financial statement dollar amounts to percentages.
Horizontal analysis and vertical analysis are two types of trend analyses. Horizontal analysis sometimes referred to as trend analysis is used to identify trends over a particular number of accounting periods. This is why horizontal analysis is also called Trend analysis.
The term Horizontal Analysis refers to the financial statement analysis in historical data from the income statement balance sheet and cash flow statement is compared with each other. The purpose of horizontal analysis is to determine whether an increase or decrease has taken place. A horizontal analysis also referred to as trend analysis is a procedure in the financial analysis where the amounts of financial information over a certain period of time is compared line by line in order to make related decisions.
It is a useful tool to evaluate the trend situations. It can be used with a balance sheet or an income statement. In other words it indicates the change either in absolute terms or as a percentage.
The increase in sales is substantial but although there is a corresponding increase in gross profit the increase is not as great. For example a 2 million profit year looks impressive following a 025 million profit year but not after a 10 million profit year. If you are an investor and thinking about investing in a company only a year-end balance sheet or income statement wouldnt be enough for you to judge how a company is doing.