Horizontal Analysis: Spotting Trends

Описание: Short & Simple Definition: A technique that compares financial data over different periods to identify trends and growth rates.

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Real-World Example: Imagine you're tracking your monthly workout progress. You look at how many pushups you did in January, then February, then March. Horizontal analysis is doing the same thing for a business, checking its sales from year to year to see if they're growing or shrinking.

Deeper Dive: Horizontal analysis, also known as trend analysis, is a technique used to evaluate changes in financial data over time. It compares figures from two or more periods (e.g., this year vs. last year) and calculates the percentage change. This analysis is crucial for spotting growth trends, identifying periods of decline, and understanding the overall direction of a business. It's particularly useful for seeing how individual items on a financial statement, such as revenue or cost of goods sold, are performing over time.

Other terms:
Trend analysis
Year-over-year analysis
Comparative analysis

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