University School of Business

DEPARTMENT - MBA
Master of Business Administration
Financial Reporting and Analysis 21BAT- 602
Chapter: 2.1

Faculty Name: Dr Charu Saxena

(Assistant Professor)

Topic: HORIZONTAL DISCOVER . LEARN . EMPOWER

ANALYSIS
 HORIZONTAL
ANALYSIS

Course Outcome
To understand the methods of preparation of various
CO1 financial statements

To examine the impact of information obtained from

CO2 financial statements on the financial position of the
business
To compare the business organizations based upon Will be covered in this
CO3 various financial statement analysis techniques lecture
Financial decision making by evaluating different
CO4 financial statements

To create financial statements and annual reports in

CO5 accordance with the companies’ act
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It is a systematic process of the critical
examination of the financial information
contained in the financial statements in order to
understand and make decisions regarding the
operations of the firm

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HORIZONTAL ANALYSIS:

These are the statements showing the profitability and financial

position of a firm for different periods of time in a comparative
form to give an idea about the position of two or more periods.

It usually applies to the two important financial statements, namely,

balance sheet and statement of profit and loss prepared in a
comparative form.

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These are the statements showing the profitability and financial
position of a firm for different periods of time in a comparative form
to give an idea about the position of two or more periods.

The financial data will be comparative only when same accounting

principles are used in preparing these statements.

Comparative figures indicate the trend and direction of financial

position and operating results.

This analysis is also known as ‘horizontal analysis’.

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The following steps may be followed to prepare the comparative
statements:

Step 1 : List out absolute figures in rupees relating to two points of time

Step 2 : Find out change in absolute figures by subtracting the first year
from the second year (Col.3) and indicate the change as increase (+) or
decrease (–) and put it in column 4.

Step 3 : Preferably, also calculate the percentage change as follows and

put it in column 5.

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Assessment Pattern

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 References

• Reference book- Maheshwari S.N, Accounting for Management, Vikas Publishing House, New Delhi,2010
• Reference Website: https://www.investopedia.com/terms/f/financial-statement-analysis.asp
• Reference Journal for advance study: Journal of Accountancy (JOA)

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THANK YOU

For queries
Email: charu.e8966@cumail.in