Tuesday, March 20, 2012

Horizontal Analysis

Horizontal analysis, also called “trend analysis,” examines changes in a company’s financial reports over time. Valuation Tutor lets you conduct horizontal analysis by letting you merge financial statements and visualize both trends and relative changes.  

For example, the following illustrates result of merging IBM’s income statement  over the last 5 years and plotting the components of Total Revenue:


Clicking on “Pie Charts” yields information on relative changes:



In this case, you can see that proportion of Total Revenue made up by each of these items has been fairly stable.
You can also see any variable scaled by any other, so for example, you can see that Financing has become a smaller percentage of Services and of Sales over time:








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