(i) Horizontal (or Dynamic) Analysis : This analysis is made to review and analysis financial statements for a number of years. It is a time series analysis. It shows comparison of financial data for several years against a chosen base year. It is useful for long term trend analysis and planning. Comparative statements or comparative financial statements are an example of horizontal analysis.
(ii) Vertical (or Static) Analysis : This analysis is made to review and analyse financial statements of one year only. Ratio analysis of the financial statement relating to a particular accounting year is an example of this type of analysis. Such an analysis is useful in comparing the performance of several companies of the same type or divisions or departments in one enterprise.
