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. NEED NEW ANSWER ASAP / ANSWER NEVER USED BEFORE Explain horizontal and vertical analysis. Do...

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NEED NEW ANSWER ASAP / ANSWER NEVER USED BEFORE

Explain horizontal and vertical analysis. Do some research .explain why these methods are used. What can we learn from horizontal and vertical analysis statements? How can results vary compared to other corporations and why can ratios better than using dollars?

COPY AND PASTE Answer in paragraphs, and no picture attachment please.

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HORIZONTAL ANALYSIS:- THE TECHNIQUE USED TO SHOW SHOW THE CHANGES IN CORRESPONDING FINANCIAL STATEMENTS OVER DIFFERENT PERIOD OF TIME. IT IS HELPFUL TO EVALUATE THE TREND SITUATIONS.

VERTICAL ANALYSIS:- IT SHOWS RESULTS AFTER THE LOOK ON EVERY ITEM AS A PERCENTAGE OF THE BASE FIGURE WITHIN THE CURRENT PERIOD. VERTICAL ANALYSIS SHOWS OF CASH FLOW STATEMENT SHOWS ALL DETAILS OF INFLOWS AND OUTFLOWS AS A PERCENTAGE OF THE TOTAL CASH INFLOWS. IT IS ALSO KNOWN AS COMMON SIZE FINANCIAL STATEMENT ANALYSIS.

RESULTS VARY:-

  • METHODS ARE NOT RIGHTLY APPLIED.
  • ERRORS IN FIGURES.
  • COMPARISON OF DIFFERENT TIME PERIOD.
  • DIFFERENT METHODS ARE USED.
  • STANDARDS ARE DIFFERENTLY SET.
  • NEED OF COMPARISON IS DIFFERENT.

USES:-

  • CONSISTENCY AND COMPARABILITY OF FINANCIAL STATEMENTS.
  • COMPARISON AMONG COMPETITORS CAN BE DONE EASILY.
  • GROWTH OF FINANCIAL PERFORMANCE OF COMPANY OVER YEARS CAN BE COMPARED.
  • HEPLS TO ASSESS RELATIVE CHANGES ON DIFFERENT LINE ITEMS OVER TIME.
  • EFFICIENCY AND PRODITABILTY OF THE COMPANY CAN BE KNOWN.
  • SHOWS COMPLETE PICTURE OF OPERATIONAL RESULTS.
  • HELPS IN DETECTING FUTURE PROBLEMS AND STRENGTHS.
  • HEPLS TO KNOW THE FROWTH RATE OF COMPANY.

RATIOS BETTER:-

  • STANDARD METHOD OF COMPARISON
  • INDUSTRY ANALYSIS AND BENCHMARKS
  • STOCK VALUSTION FOR STRENGTH AND WEAKNESS
  • PLANNING AND PERFORMANCE
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