Good day, Ma’am.

Today, I am going to report about Financial Statement Analysis.

But first, what is Financial Statement Analysis?
(READ)
There are three kinds of Financial Statement Analysis techniques, Horizontal
Analysis, Vertical Analysis, and Financial Ratios. However, today, we will only talk
about Horizontal analysis.
Horizontal Analysis (READ)
This will reveal the behavior of the account over time. AND IT WILL ANSWER THE
FOLLOWING QUESTIONS: Is it increasing, decreasing or not moving? What is the
magnitude of the change? Also, what is the relative change in the balances of the
account over time? (READDDDD)
We have our example here.
So as for the sales in 2020, we have P195,00 and in 2021 we have P280,000
Notice that these two periods have different amounts. For our analysis, we have
here two different approaches that are used.
The first one is the direct comparison, which is the one that we used in Peso
exchange: 
The direct comparison is simply comparing the results of one accounting
period to another.
As I’ve said earlier, in 2020, we have P195,00 and in 2021 we have P280,000.
Here, we are going to follow the formula found in this slide, which is, Peso
change=Balance of Current Year-Balance of Prior Year. That is, Peso change =
P280,000 - P195,000 = P85,000. Therefore, our peso change is P85,000.
So, this comparison method allows us to quickly view any changes from period
to period, and whether those changes are beneficial or require further
research.
The second one is percentage: So, the percentage method is helpful if you’re
looking for more in-depth analysis. 

Again, to be able to come up with the change in percentage, we are going to be

following this formula: Percentage change= (Balance of Current Year-Balance of
Prior Year)/(Balance of Prior Year). Then, substitute our values, making it
Percentage change = (P280,000 - P195,000) / P195,000 = 43.59%. Therefore, our
percentage change in this given example is 43.59%.

Combining the two results from our calculations, we can now have our
conclusion. So as for the evaluation, Sales increased by our peso change, P85,000.
This represents growth of our percentage change, 43.59% from the base period.

That’s pretty much it for our horizontal analysis. Thank you and God bless.