MANAGEMENT

BUISENESS MANAGEMENT

FINANCIAL MANAGEMENT

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Which analysis is based only on one year’s data:
A
Cash Flow Statement
B
Dividend Analysis
C
Vertical Analysis
D
Horizontal Analysis
Explanation: 

Detailed explanation-1: -Vertical Analysis: The presentation of financial statements in common size form is known as vertical analysis. Vertical analysis is based on the data of one year only. Common size statements are those in which individual figures of financial statements are converted into percentages to some common base.

Detailed explanation-2: -What is YoY? YoY stands for Year over Year and is a type of financial analysis that’s useful when comparing time series data. Analysts are able to deduce changes in the quantity or quality of certain business aspects with YoY analysis.

Detailed explanation-3: -When financial statements for a single year are analysed, the analysis is called vertical analysis. The items in the financial statements are expressed as a percentage to total and the total is taken as equivalent to 100. Statements containing such analysis are termed as ‘Common Size Statements’.

Detailed explanation-4: -Common size statements is also known as ‘Vertical analysis’.

Detailed explanation-5: -While horizontal analysis is used to compare line items over specific periods of time in order to spot trends, vertical analysis is used to restate and compare changes in percentages, and is more frequently used by investors and creditors to compare company performance with other companies in the same industry.

There is 1 question to complete.