Chapter 14 notes - ACG 2071 - Chapter 14 Financial...

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ACG 2071 - Chapter 14 S. Smith Financial Statement Analysis Horizontal Analysis: A comparison of a company’s performance for different periods of time. For example, an evaluation of the change in sales, both on a dollar and percentage basis, from one year to the next would be considered horizontal analysis. Trend Percentages are a form of horizontal analysis. Instead of looking at changes from one year to the next, trend percentages compare information over longer periods of time. With trend percentages, a base year is selected and then used for comparing several years of company financial information. Vertical Analysis: A comparison of each line-item in the financial statements to some specified base (the 100% item). Normally, the sales (revenue) amount is the base figure when completing vertical analysis on the income statement. Common-Size Income Statement Comparison: Sometimes it is helpful to compare companies of different sizes. In this type of analysis, it is often done by looking at percentages rather than dollar amounts. By comparing percentages,
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This note was uploaded on 08/11/2011 for the course ACG 2071 taught by Professor Smith during the Spring '07 term at University of Central Florida.

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Chapter 14 notes - ACG 2071 - Chapter 14 Financial...

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