Audit and economical analysis

Horizontal (periodic) analysis of accounting balance

Horizontal analysis is a method of assessing financial position by comparing separate financial indicators.

Elements and items of financial statements are judged on an absolute and relative basis, based on horizontal analysis of their financial performance.

In the financial analysis, the following forms of horizontal analysis are used.

1. Comparison of reporting indicators at the beginning and end of the period.

2. Comparison of reporting indicators with the same period of the previous year.

3. Dynamic comparisons of reporting indicators.

4. Comparative comparison of financial performance of various organizations.

The horizontal analysis of the financial statement is called a comparative study of elements and items of the financial statements in absolute and relative terms compared to or before the reporting period.

The horizontal analysis assesses the financial indices of two or more periods (absolute and relative expression). When selecting a range of intervals, the width of the interval spaces is taken equal. For example; quarterly, semi-annually, and yearly, respectively, compared to quarterly, half yearly and yearly indicators of the previous year.

You have to imagine horizontally and vertically. It does not matter if you use them together. Therefore, horizontal and vertical types of analysis are always carried out together.

Horizontal analysis of accounting balance