Horizontal analysis is also known as trend analysis. Horizontal analysis of financial statement is important as in this analysis base year is same for horizontal analysis of next years. Horizontal analysis can be performed on income statements, balance sheet and cash flows.
Definition and Explanation of Horizontal or Trend Analysis: Comparison of two or more year’s financial data is known as horizontal analysis or trend analysis. Horizontal analysis is facilitated by showing changes between years in both dollar and percentage form as has been done in the example below. Showing changes in dollar