Chap16&17QuizBUS4113

Chap16&17QuizBUS4113 - Amberton University BUS 4113...

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Amberton University BUS 4113 – Accounting and Finance for Managers Chapter 16 1. How is horizontal analysis performed and how is it used in financial statement analysis? Horizontal analysis is used to analyze changes in accounts occurring between years. Changes in the income statement are analyzed in the same way. Horizontal analysis of financial statements over several years can be used to build prediction models to forecast financial performance in the future and identify problem areas by looking for sudden or abnormal changes in accounts. 2. How is vertical analysis performed and how is it used in financial statement analysis? Vertical analysis uses common-size financial statements to remove size as a relevant variable in ratio analysis. It compares financial statements of different companies and financial statements of the same company across time after controlling for differences in size. Common-size financial statements are statements in which all items have been
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This note was uploaded on 02/03/2011 for the course BUS 3101 taught by Professor Loyd during the Spring '09 term at Dallas.

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Chap16&17QuizBUS4113 - Amberton University BUS 4113...

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