Difference Between Horizontal and Vertical Analysis

Key Difference – Horizontal vs Vertical Analysis

财务报表such as the收入证明,balance sheet,和cash flow statementare important statements that should be studied extensively in order to arrive at conclusions regarding the performance of the current financial year as well as to assist planning the upcoming financial year’s budget. Horizontal and vertical analysis are two main types of analysis methods used for this purpose. The key difference between horizontal and vertical analysis is thathorizontal analysis is一个程序财务分析其中在一定时间段内的财务报表中的金额按行进行比较，以做出相关的决定whereasvertical analysis is the method of analysis of financial statements where each line item is listed as a percentage of another item.

内容
1.Overview and Key Difference
2.什么是水平分析
3.What is Vertical Analysis
4.Side by Side Comparison – Horizontal vs Vertical Analysis
5.概括

什么是水平分析?

A horizontal analysis, also referred to as ‘trend analysis’, is a procedure in the financial analysis where the amounts of financial information over a certain period of time is compared line by line in order to make related decisions.

E.g. HGY Company’s income statement for the year ended 2016 is shown below along with the financial results for the year 2015.

Horizontal analysis involves comparing financial results line by line horizontally. This assists understanding how the results have changed from one financial period to another. This can be calculated in absolute terms as well as in percentage terms. In the above example, revenue of HGY has increased by $1,254m ($6,854m- $5,600m). As a percentage, this increase amounts to 22.4% ($1,254m/$5,600m* 100).

It is important for every company to grow their business over time in order to createshareholdervalue. Thus, horizontal analysis helps to understand how successfully this has been achieved considering a period of time.

What is Vertical Analysis?

Vertical analysis is the method of analysis of financial statements where each line item is listed as a percentage of another item to conduct useful decision making. Here, each line item on the income statement is expressed as a percentage ofsales revenue和each line item on the balance sheet is expressed as a percentage of total assets. Continuing from the above example,

E.g. HGY’s gross profit margin for 2015 and 2016 is $3,148m can be calculated as,

Gross profit margin for 2015 = $3,148m/$5,600m* 100
= 56.2%

2016年的毛利润利润率= $ 38.44亿美元/$ 6,8.54万* 100
= 56.1%

The comparison between the two ratios indicates that despite the rise in both revenue andcost of sales,the毛利has changed only marginally.

财务报表应根据会计标准以标准的垂直格式准备。垂直分析的主要用途是计算财务比率，而财务比率又是评估公司绩效的关键指标。一旦计算了比率，就可以轻松地将它们与类似公司的比率进行比较，以实现基准测试目的。

水平分析和垂直分析有什么区别？

Horizontal vs Vertical Analysis
水平分析是基本分析中的一个程序，在基本分析中，一定时间段内的财务信息数量按行进行比较以做出相关决策。	垂直分析是对财务报表进行分析的方法，其中将每个订单项列为另一个项目的百分比以帮助决策。
Main Purpose
The main purpose of horizontal analysis is to compare line items to calculate the changes over time.	Main purpose of vertical analysis is to compare changes in percentage terms.
Usefulness
Horizontal analysis becomes more useful when comparing company results with previous financial years.	垂直分析对于将公司结果与其他公司进行比较更有用。

概括- Horizontal vs Vertical Analysis

水平分析和垂直分析之间的关键区别取决于提取陈述中的财务信息以进行决策。水平分析通过按线方法采用一条线来比较一段时间内的财务信息。垂直分析的重点是对使用财务信息计算的比率进行比较。这两种方法均使用相同的财务报表进行，并且对于以知情的方式做出影响公司的决策同样重要。

参考
1.“水平分析。”Investopedia。N.P.，2015年8月12日。2017年4月12日。
2.“垂直分析。”Investopedia。N.P.，2015年7月17日。2017年4月12日。
3.”Horizontal Vs Vertical Analysis of Financial Statements.” Accounting, Financial, Tax. N.p., n.d. Web. 13 Apr. 2017.

Image Courtesy:
1. “y2cary3n6mng-5ha51l-income-statement-example” byPeter Baskerville(CC BY-SA 2.0)viaFlickr