Give any two differences between horizontal analysis and vertical analysis of financial statements.

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Solution

Basis Horizontal Analysis Vertical Analysis
Meaning This analysis is carried out to review ana analyse financial statements for a number of years. This analysis is carried out to review and analyse the financial statements of one year only
Usefulness It is gnerally used for time serires analysis. It is generally used for cross-sectional analysis.

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Q. Distinguish between Vertical and Horizontal Analysis of financial data.

Q. What is meant by 'Analysis of Financial Statements'? State any two objectives of such an analysis.

State any two objectives of 'Analysis of financial statement'.

Which of the following statements are false?
A) When all the figures in a balance sheet are stated as percentage of the total, it is termed as horizontal analysis.
B) When financial statements of several years are analyzed, it is termed as vertical analysis.
C) Vertical Analysis is also termed as dynamic analysis.

Q. State any one limitation of 'Analysis of Financial Statement'.

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Basis	Horizontal Analysis	Vertical Analysis
Meaning	This analysis is carried out to review ana analyse financial statements for a number of years.	This analysis is carried out to review and analyse the financial statements of one year only
Usefulness	It is gnerally used for time serires analysis.	It is generally used for cross-sectional analysis.