Posted: May 26th, 2016

What are the differences between vertical and horizontal analysis?

What are the differences between vertical and horizontal analysis? Which method would external users most likely use? How about internal users? Discuss the uses of the two analysis methods and how you would use each to analyze a company s performance?
What three ratios would you list as the most important? Why? Which ratios would external users be most interested in? Why? Which ratios would best help internal users manage the business? Why? Beyond the basic financial statements what other information would you want to fully analyze a company s performance? Why?
Why is it important to report discontinued operations or extraordinary items separately from income from continuing operations? Is this method of reporting allowed? What concerns does this type of reporting create? Does the average investor understand the difference? In what way(s) might the information be presented to clarify meaning for investors?