Financial Analysis

Horizontal Analysis is an analytical method used to compare financial statements—primarily the balance sheet and income statement—based on historical data, in order to uncover the financial performance of your company over a specified period of time. To conduct horizontal analysis, i.e., evaluate underlying trends, it’s essential to compare the financial statements of your company over two or more accounting periods.

Carrying out horizontal analysis of the income statement and balance sheet helps investors and creditors to determine the current financial position of your company. By looking at past performance, it can help you assess growth rates, spot trends (by comparing changes from period to period), generate forecasts, or project the insights gained into the future. Horizontal analysis can help evaluate your company’s financial standing or position over its competitors.