Distinguish between Vertical and Horizontal Analysis of financial data.

Question

1 Answer

answered Mar 17, 2020 by Randhir01 (57.2k points)
selected Mar 18, 2020 by SonaSingh

Best answer

Basis of Difference	Horizontal Analysis	Vertical Analysis
Meaning	If refers to the comparison of and item of the financial statement of one period of periods to its corresponding item of the base accounting period	If refers to the comparison of item -items of the financial statement to the common item of the same accounting period
Purpose	Its purpose is to determine the change in an item during an account period. The change in the item is expressed either in absolute figure or in percentage or in both terms	Its purpose is to determine the proportion item/items to the common item of the same account period. the change in the item is expressed either in ration or in percentage terms.
Usefulness	It indicates growth or decline of the item	It helps in predicting and determining the future relative proportion of an item to the common item.