ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Whereas vertical analysis analyzes a particular financial statement using only one base financial statement of the reporting period, horizontal analysis compares a specific financial statement with other periods or the cross-sectional analysis of a company against another company.

Detailed explanation-2: -Comparative Income Statement shows absolute figures, changes in absolute figures, unlimited data in terms of percentages, and an increase (or decrease) in percentages over the different periods.

Detailed explanation-3: -Horizontal analysis is used in the review of a company’s financial statements over multiple periods. It is usually depicted as percentage growth over the same line item in the base year. Horizontal analysis allows financial statement users to easily spot trends and growth patterns.

Detailed explanation-4: -A cash flow statement shows changes over time rather than absolute dollar amounts at a point in time. It uses and reorders the information from a company’s balance sheet and income statement.