Question

The following is an example of: Year Increase (Decrease) 2018 2017 Amount % Cash $300,000 $800,000 ($500,000) (62.5) Accounts receivable 500,000 200,000 300,000 150.0 Inventory 800,000 700,000 100,000 14.3 Long-term assets 3,400,000 2,300,000 1,100,000 47.8 Total assets $5,000,000 $4,000,000 $1,000,000 25.0 O Vertical analysis. Both vertical and horizontal analvsis Horizontal analysis O Diagonal analysis.

Answer 1

Answer:

Horizontal Analysis

Explanation:

                                                Year

Accounts Name                   2018           2017           Increase/(Decrease)   %

Cash                                $300,000     $800,000        (500,000)           62.5%

Accounts Receivable     $500,000     $200,000         300,000             150%

Inventory                         $800,000     $700,000          100,000             14.3%

Long-term assets          $3,400,000  $2,300,000       1,100,000            47.8%

Total assets                   $5,000,000  $4,000,000       1,000,000           25%

It is a horizontal analysis of a financial statement. It is also called a trend analysis. Horizontal analysis of financial statement shows the comparative analysis of subsequent years amount and ratio. Therefore, it is a horizontal analysis.