horizontal analysis

Horizontal analysis

The process of dividing each expense item of a given year by the same expense item in the base year. It allows assessment of changes in the relative importance of expense items over time and the behavior of expense items as sales change.

Horizontal Analysis

In fundamental analysis, the comparison of a financial ratio or some other benchmark to the same ratio or benchmark for a different period of time. For example, horizontal analysis may investigate whether a company's earnings have gone up or down over a given quarter or year. Horizontal analysis may be used in making investment decisions to determine a company's financial health. In general, a horizontal analyst chooses a timeframe to match the timeframe of a possible investment.

horizontal analysis

Comparison of financial statements or specific items in a financial statement that covers two or more periods. Compare vertical analysis.