Horizontal analysis allows investors and judges to see what has been driving a company's financial performance over several years and to spot trends and growth habits. This type of analysis enables analysts to assess relative differences in different line items over time and project them into the destiny.
<h3>When Should horizontal examination be used?</h3>
You use horizontal analysis to find and monitor movements over a period of time. Instead of creating an earnings statement or balance sheet for one period, you would also complete a comparative balance sheet or income information to cover quarterly or annual business activities.
<h3>What are the benefits of horizontal analysis?</h3>
The key advantage of using horizontal analysis is that it allows for the visual identification of anomalies from long-running trends. By presenting data on a relative basis, changes in the data are more readily apparent. In addition, the use of horizontal research makes it easier to project directions into the future.
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