Running head: COMPARATIVE ANALYSIS 1

Comparative Analysis

Cisco Carbajal

ACC/561

February 20, 2016

MONIQUE SMALLING
COMPARATIVE ANALYSIS 2

Comparative Analysis

Comparative analysis is an important tool to helps users from different financial statements and
data to help make decisions founded on the ongoing changes within the company’s financial
position. Comparative analysis also helps to determine the positive and negative changes of any
data between the past years and current year and its effects on the company’s operations
(Kimmel, 2011). On a graph there are two lines, a horizontal and a vertical lines, these lines can
help analyses the two primary comparative methods. As you know the two lines stand s for
completely different reasons. The horizontal line is used by investors to analyze and determine
the percent and amount in decrease or increase in related items by using the previous year
statements as a base. The same line would be used internally, within the company to view the
results to explain the cause in changes in the liabilities, assets, cost of goods sold and for other
financial statements data (Kimmel, 2011). Ex: when the total liabilities and assets decrease, this
could increase the stockholders equity. The relationship of an item is shown by the vertical line
and its financial statements. Ex: The income statement shows each component listed as percent
of net sale. (Remember, there are many types of graph styles, it depends on your preference)

Kimmel, P. D. (2011). Accounting: Tools for Business Decision Making(4th Ed.) John Wiley & Sons, Inc.