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Handouts Vertical and Horizontal Analysis

Vertical analysis and horizontal analysis are techniques for analyzing financial statements. Vertical analysis presents each financial statement item as a percentage of a total to analyze composition. Horizontal analysis compares data over several periods by calculating percentage changes to analyze trends. The document provides examples of applying vertical and horizontal analysis to the income statement, balance sheet, and cash flow statement of JSC Foods Corporation from 2010-2014.

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Cindy Kibos
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269 views2 pages

Handouts Vertical and Horizontal Analysis

Vertical analysis and horizontal analysis are techniques for analyzing financial statements. Vertical analysis presents each financial statement item as a percentage of a total to analyze composition. Horizontal analysis compares data over several periods by calculating percentage changes to analyze trends. The document provides examples of applying vertical and horizontal analysis to the income statement, balance sheet, and cash flow statement of JSC Foods Corporation from 2010-2014.

Uploaded by

Cindy Kibos
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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VERTICAL ANALYSIS AND HORIZONTAL ANALYSIS

VERTICAL ANALYSIS
 also called as common-size analysis.
 With vertical analysis, all accounts in the statement of financial position are presented as a percentage of total
assets while all accounts in the statement of profit or loss are presented as a percentage of sales or revenues.

Table 1:
JSC Foods Corporation
Common-Size Statement of Profit or Loss
For the Years Ending December 2010 - 2014

2014 2013 2012 2011 2010


Net Sales 100% 100% 100% 100% 100%
Cost of Sales 80% 80% 81% 82% 83%
Gross Profit
Operating Expenses
Operating Income
Interest Expense
Income before Taxes
Taxes
Net Income

Table 2:
JSC Foods Corporation
Common-Size Statement of Financial Position
As of December 2010 – 2014

2014 2013 2012 2011 2010


Assets
Current Assets
Cash 5% 5% 5% 5% 5%
Receivables
Inventories
Other Current Assets
Total Current Assets
Noncurrent Assets
Property, Plant and Equipment, Net
Other Noncurrent Assets
Total Noncurrent Assets
Total Assets 100% 100% 100% 100% 100%

Liabilities and Equity


Current Liabilities
Trade Payables 23% 23% 24% 20% 17%
Income Tax Payable
Current Portion of Long-Term Debt
Other Current Liabilities
Total Current Liabilities
Noncurrent Liabilities
Long-term Debt, Net of Current Portion
Total Liabilities
Stockholders’ Equity
Capital Stock
Retained Earnings
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity 100% 100% 100% 100% 100%
HORIZONTAL ANALYSIS
 also called trend analysis
 a technique that shows changes in financial statements accounts over time.
 to illustrate change in sales of JSC Foods Corporation from 2013-2014, the computation is as follows:
% Change = ((2014 Sales – 2013 Sales) ÷ 2013 Sales) x 100%
= ((52,501,085 – 47,345,223) ÷ 47,345,223) x 100%
= (5,155,862 ÷ 47,345,223) x 100%
= 10.89%

Table 3:
JSC Foods Corporation
Annual Changes in the Statement of Profit or Loss in %
From 2011 to 2014

2014 2013 2012 2011


Net Sales 11% 12% 10% 8%
Cost of Sales
Gross Profit
Operating Expenses
Operating Income
Interest Expense
Income before Taxes
Taxes
Net Income

Table 4:
JSC Foods Corporation
Annual Changes in the Statement of Financial Position in %
From 2011 to 2014

2014 2013 2012 2011 2010


Assets
Current Assets
Cash
Receivables
Inventories
Other Current Assets
Total Current Assets
Noncurrent Assets
Property, Plant and Equipment, Net
Other Noncurrent Assets
Total Noncurrent Assets
Total Assets

Liabilities and Equity


Current Liabilities
Trade Payables
Income Tax Payable
Current Portion of Long-Term Debt
Other Current Liabilities
Total Current Liabilities
Noncurrent Liabilities
Long-term Debt, Net of Current Portion
Total Liabilities
Stockholders’ Equity
Capital Stock
Retained Earnings
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity

Table 5: Annual Changes in the Statement of Cash Flows in %

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