Theory Questions · Q3
Q.Distinguish between Horizontal Analysis and Vertical Analysis of financial statements.
Maharashtra MsbshseTextbookSubjectiveImportance★★★★★
12% · 3/25 Questions
You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.
Start your 14-day free trial to unlock the full solution →| Basis of distinction | Horizontal Analysis | Vertical Analysis |
|---|---|---|
| Direction of comparison | ACROSS two or more accounting periods | WITHIN a single accounting period |
| What is compared | The SAME item, over time (e.g. Sales in 2025 vs 2026) | DIFFERENT items of the same statement, against a common base |
| Working tool | Comparative Statement (Absolute Change + % Change columns) | Common-Size Statement (every item as a % of a common base) |
| Common base used | The Previous Year's figure of the SAME item | Net Sales (Income Statement) or Total Assets (Balance Sheet) |
| What it reveals | The TREND/direction and pace at which an item is growing or shrinking | The PROPORTION each item bears to the whole, in one period |
Unlock everything free for 14 days
- Full step-by-step solutions
- Concept-first explanations
- Methods, shortcuts & mistakes
- PYQ mapping + timed mock tests
Full access for 14 days. No credit card required.