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Horizontal financial statement analysis (also referred as trend analysis) is the comparison of companys
financial report information over some periods of time. Applying horizontal analysis to firms statements
makes it comfortable to estimate its performance over time. Vertical is the analysis of items of the
companys statements when one item is being compared to the base item. While the horizontal analysis
aims to estimate the dynamics, vertical is commonly applied for a single period. The reason for performing
it is the necessity to estimate the relative proportions of different assets and finance sources elements.
Applying common-size analysis to firms balance sheet gives us a clear understanding of its capital
structure, which can be compared to other firms or some optimal capital structure for the industry. It also
allows to estimate whether some of the companys debts being too high.
year 1, which is a big achievement (net income share in the total amount of revenue raised to 16.61% in
year 2 comparing to 11.52% in year 1.). However, this was followed by a slight decrease of this ratio during
the year 3. Notable is also an increasing trend of gross profit margin (gross profit share in the total amount
of revenue) over the period of three years. From this common-size statement of profit and loss we also can
notice a big percent of research expenses, which means the company is trying to be innovative and invests