The Total solution for NCERT class 6-12
Basis of Comparison
Horizontal Analysis
Vertical Analysis
Meaning
It is the comparative evaluation of a financial statement of two or more periods, for calculating relative and absolute variances for every line of item
It is the analysis of financial data which is independent of time and items relating to financial information of company and its impact on the performance of the company.
Purpose
To specify changes in financial performance between two comparable accounting periods
To compare a financial item as a percentage of base figure
Comparison of
Intra-firm comparison
Both intra and inter firm comparison
Usefulness
Growth or decline of an item is represented here
Is useful in predicting and determining the relative proportion of an item of the financial statement to a common item in the financial statement