Horizontal Analysis Of Income Statement

Horizontal analysis of the income statement is usually in a two year format such as the one shown below with a variance also shown that states the difference between the two years for each line item.

Horizontal analysis of income statement. An alternative format is to simply add as many years as will fit on the page without showing a variance so that you can see general changes by. Let us now look at the horizontal analysis of colgate. Trend analysis for income statement items using excel. Comparative retained earnings statement with horizontal analysis.

Colgate horizontal analysis example. To get a clear picture of the performance of our business we need to do a horizontal analysis of each item in our income statement. In the horizontal analysis the financial data of the companies is compared to the base of the comparative financial statement for fixing the problems within the. In above analysis 2007 is the base year and 2008 is the comparison year.

Here we have the yoy growth rates of colgate s income statement from 2008 until 2015. A complete horizontal analysis of income statement might tell us that while our. In the relative financial statement of the companies. Horizontal analysis of an income statement.

All items on the balance sheet and income statement for the year 2008 have been compared with the items of balance sheet and income statement for the year 2007. We calculate the growth rate of each of the line items with respect to the previous year. In other words it indicates the change either in absolute terms or as percentage change year over year y o y in each of the line items. The term horizontal analysis refers to the financial statement analysis in historical data from the income statement balance sheet and cash flow statement is compared with each other.

Trend analysis for income statement items using excel.