Horizontal Analysis - Meaning, Formula, Calculation & Interpretations

In this tutorial, we'll go over the finer details of Horizontal Analysis, including its formulas and step-by-step calculations. Following that, we will conduct a horizontal analysis of the Colgate Case Study and interpret the findings.

What is Horizontal Analysis?
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Horizontal analysis, also known as trend analysis, refers to the percentage change in the same line item of a financial statement in the next accounting period compared to the value of the baseline accounting period. Horizontal analysis can be performed on any of the item in the income statement, balance sheet and statement of cash flows.

Formula
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Horizontal Analysis formula = [(Amount in comparison year – Amount in the base year)/ Amount in a base year] x 100

Advantages of Performing Horizontal Analysis
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• Horizontal analysis helps evaluate trends year over year (YoY) or quarter over quarter (QoQ), for example, how much has the revenue increased over the years.
• It enables investors to view and compare actual data for consecutive years.
• Horizontal analysis is simple to interpret. It does not require any special financial skill to understand the difference between the previous year's data and the current data.

To know more about Horizontal Analysis in Finance, you can go to this link:

Connect with us!

[adewaleadeolu]

this is a wonderful presentation, clear to understand and very educative.

[ashmitjacob]

Explained everything in very detail. Thanks.

[narayanbista]

Everything explained in this video was so much easy to understand this function in a detailed manner thank you sir for such an amazing video.

[thendonelsie]

Thank you, this is extremely helpful & it really saved my time, I have been battling to find out how horizontal analysis is calculated.

[anantdeepsingh]

thank you sir.
Please come up with a series of F.modelling as well. helps to make a routine ! Cheers

[poojaborkar]

Best and Excellent Video. Well presented and detail explanation. Very helpful video. Great Sir.

[shailajama]

It was very much helpful to me . Thank you

[cmanas]

It would be beneficial if you can create a tutorial series specific to IT Service industry as the income statement and Balance sheet of such companies are slightly different.

[saketdixit]

Please upload the videos on project finance ....and valuation like company comparable or DCF method

[adrifazabaraka]

this is gorgeous, but please check row before interest expense (net), there is one row before that. So, the numbers in row interest expense (net) is for Non-service related post retirement costs, it is not for interest expense (net). Meanwhile, the percentage for interest expense (net) is 3% (2016), 40.2% (2017), ...
Hopefully, you can re-upload the horizontal analysis's video.

[prashantchapagai]

sir while forecasting, how the value needs to be put like in this video you have put 8% so is there any reason behind putting 8% rather than other value such as 7% or 6% ?