Advice 1: How to conduct a vertical analysis

Vertical analysis is one of methods of financial analysisand. The technology of vertical analysisis that each article analysisiremove financial report (for example, balance sheet) expressed as a percentage of a certain base (a base indicator). Conduct financial analysisand is an effective way to study the state of the company and its financial and economic activities.
How to conduct a vertical analysis
You will need
  • calculator
Define the basic article analysisiremove of its financial reports. In conducting the analysisas of the balance sheet as the base indicator is the value of the balance sheet, statement of profit and loss - amount of earnings, statement of cash flows - the amount of growth funds during the period.
Express article of the financial statement as a percentage of baseline. To do this, the value of each article is divided by the base value and multiplied by 100. The value of the basic article will be 100%.
Next to the absolute value of each row of the report write to her a percentage of the base value. Thus, you will receive a vertical structure analysisiremove of its financial reports.
Depending on the goals of vertical analysisand you can, for example, correlate the structure of the financial report with averages for the industry to determine the company's position in the market. Or, aboutanalysisirova the weight of each article to draw conclusions about the presence of the company of those or other problems and benefits.
Vertical analysis of financial statements is combined in the horizontal and ratio analysis.
Useful advice
Vertical analysis accounting or financial Department of the company on a permanent basis. Usually analyzed accounting statements - the balance sheet, statement of profit and loss, statement of cash flows.

Advice 2 : How to calculate horizontal analysis

Horizontal analysis is one way of assessing the financial activities of the company, or to increase or decrease its effectiveness. The purpose of this analysis is to identify the dynamics of various processes in the company compared to previous periods.
How to calculate horizontal analysis
Determine what sections and articles of the balance you'll consider the horizontal analysis. Suppose it will be assets, liabilities, income statement and cash flow. The analysis algorithm is fairly simple, the calculations can be performed easily in a tabular form, making the results more visual.
Make four tables with five columns each. In the first column write down the balance sheet, second and third data for reporting and base periods. The fourth and fifth columns allow for the recording of the results of the analysis, namely the absolute and relative deviation.
Label the first table "Assets", fill in the first column. For example, cash, securities, fixed assets (buildings, equipment, depreciation), investments, short-term and long-term investments, advances to suppliers of equipment or materials, etc.
Head of balance sheet data in the accounting and basic periods. These periods should correspond to each other: the calendar year, the same quarter of different years or month, e.g., June 2010 and 2011 etc.
Fill in the column "Absolute deviation". To do this, calculate the difference between the values of each row by subtracting the second column from the third. In other words, the absolute deviation shows how the numbers have changed compared to the similar period in the past. The value can be either positive, i.e. directed upward, or negative.
Divide the data of the third column to the second, respectively, on each line, multiply the results by 100 and record in the fifth and final column. Title it "Relative deviation"; this column shows the percentage change of the same data. The increase in this case shows the value of calculated values greater than 100%.
Do the same with the other three analytical tables: liabilities (short-term and long-term liabilities, credits/loans, etc.), the income statement (sale of assets, labor cost, overhead costs, material costs, dividends, interest, taxes, etc.) and report of cash flows (receipt/payment of dividends, sale/purchase of assets, repayment of loans and Bank loans, etc.).
Add in each table totals row that contains the data for all the analyzed articles. Use a computer program to facilitate calculations and acceleration for horizontal analysis, such as Microsoft Excel.
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