Question

What is Horizontal Analysis?

What is meant by ‘Horizontal Analysis’?

Answer 1

Horizontal Analysis is the process of analyzing financial statements for multiple years. It involves comparing financial data over a number of accounting periods, usually presented in the form of comparative financial statements. This analysis helps identify trends, increases, or decreases in financial items over time, thereby showing the strengths and weaknesses of the business across years. It is also called dynamic or time series analysis because it studies changes over multiple periods.