Vertical Financial Statement Analysis
Horizontal analysis is a vital tool in the arsenal of financial analysts, offering a dynamic view of a company's financial health over time. By providing insights into trends, growth rates, and performance metrics, this technique supports more informed and strategic decision-making. While it should be used in conjunction with other analytical methods, horizontal analysis remains a cornerstone of thorough financial analysis.
What is the difference between horizontal analysis and vertical analysis?
Horizontal analysis compares financial data over multiple periods, while vertical analysis compares different line items within a single period.
How is horizontal analysis used in forecasting?
Horizontal analysis provides historical trends that can be used as a basis for forecasting future financial performance.
Can horizontal analysis be used for non-financial data?
While horizontal analysis is primarily used for financial data, it can also be applied to non-financial data to identify trends and patterns.
What other financial analysis methods complement horizontal analysis?
Vertical analysis, ratio analysis, and cash flow analysis are commonly used alongside horizontal analysis to gain a comprehensive understanding of a company's financial position.
How often should horizontal analysis be conducted?
Horizontal analysis can be performed annually or over any other relevant period, depending on the specific requirements and objectives of the analysis.
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By Victoria Collin |
September 23, 2021
Horizontal Analysis is an analytical method used to compare financial statements – primarily the balance sheet and income statement – based on historical data, in order to uncover the financial performance of a company or companies over a specified period of time. To conduct horizontal analysis i.e. evaluate underlying trends, it’s essential to compare financial statements of a company or companies over two or more accounting periods.
Carrying out horizontal analysis of the income statement and balance sheet helps investors and creditors to determine the current financial position of a company. By looking at past performance, it can help assess growth rates, spot trends (by comparing changes from period to period), generate forecasts, or project the insights gained into the future. Horizontal analysis can help evaluate a company’s financial standing or position vis-à-vis its competitors.
In horizontal analysis, the changes in specific items in financial statements i.e. net debt on the balance sheet or revenue on the income statement– are expressed as a percentage and in a specific currency – for example, the U.S. dollar.
The horizontal analysis involves two types of formulas – one to compute percentage change and the other to calculate the absolute change in a specific currency. For example, take the income statement of a company and we can select a line item, e.g. net income. The formula for horizontal analysis will be:
Historical analysis (%) = net income in year 2 – net income in the base year (year 1) / net income in a base year * 100
Note, year 2 is the comparison year. If the comparison year is year 3, then we will input the net income of year 3 and compute the percentage change between year 3 and year 1 (base year).
Horizontal Analysis (US$) = Net income in year 2 – Net income in the base year (year 1)
We use the same formula for other items in the income statement and balance sheet.
These formulas are used to evaluate trends which can either be quarter-on-quarter or year-on-year depending on the accounting period from which the data is sourced. For horizontal analysis, it’s best to take several years of historical data to gain useful insights into how a company is performing. This can help determine what is a clear trend and what may be a one-off event.
To perform horizontal analysis vis-à-vis either the income statement or the balance sheet, we will have to first compare the financial results i.e. the change in the line items from one accounting period to the other in order to discern if the change from one period to the other is positive or negative and how strong is the growth or decline.
For example, let’s take the case of the income statement – if the gross profit in year 1 was US$40,000 and in year 2 the gross profit was US$44,000, the difference between the two is $4,000. Here the change is positive and we can calculate the percentage change.
When we use percentage change, it is very useful to carry out a more in-depth analysis and identify trends. In the example above, the percentage change in the gross profit from year 1 to year 2 is calculated as 4,000/40,000 * 100 = 10%.
If we take historical data of the financial statements of a company for year 1 and year 2, then one can compare each item and how it has changed year-over-year. We can use this trend to project the line items for future years.
In other words, one can take year-on-year or quarter-on-quarter growth rates of all the items of the income statement or the balance sheet – based on the historical data. Thereafter, one can make assumptions about the future growth rates. For example, in the income statement, we can, based on historical data and trends, make assumptions about sales growth and then forecast the sales growth rates through the forecast periods.
Given below is a horizontal analysis in excel of a comparative income statement (i.e. year 1 – base, year 2, and year 3). Using the aforesaid formulas, we have computed the absolute change (in US$) and percentage change (%) of all line items in the income statement between year 1 (base year and year 3. This can be viewed from the last two columns and the formulas can be viewed in the Excel spreadsheet. This is the first type of horizontal analysis. This Excel sheet is available in our free downloads.
We can now see how much any item, such as net income, increased or decreased from year 1 (base year) to year 3 in absolute and percentage terms. In other words, we can calculate how much net income increased or decreased from year 1 to year 3 (or for that matter any year). Here net income has decreased by $2,750 or 12% in year 3 when compared to year 1.
Secondly, in the second type of horizontal analysis, we are interested in knowing about the underlying trends in the line items of the income statement. For this, we compare the absolute change ($) and percentage change (%) in all the line items from one period to the other. One should ideally take three or more accounting periods/years to identify trends and how a company is performing from one year/accounting period to the next year/accounting period.
Here, for the sake of illustration, we have shown the absolute change (in US$) and percentage change (%) of all line items in the income statement between year 1 and year 2 only. The computations of the same have been done in columns F and H.
Such analysis provides valuable insights into why any of these line items rose or fell sharply or markedly in year 2, compared to year 1. For example, net income could fall sharply in year 2, despite a rise in sales, due to a marked rise in the cost of goods sold, marketing expenses, administrative expenses, and/or depreciation expenses.
This type of analysis is also very useful if an investor wants to determine the performance of a company prior to investing in the same. For example, an investor may want to evaluate the performance of a company over the past year– relative to the base year in order, to decide whether it is worthwhile investing in this company or not.
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by Hady ElHady | Mar 13, 2024
You can carry out the analysis of financial statements using many methods. Two popular methods that cover different needs are horizontal and vertical analysis. Horizontal analysis studies change over time for a specific variable. Vertical analysis, on the other hand, focuses on a specific period of time and studies the proportions of the total amount represented by the different variables for that period.
In this article, you will learn about the horizontal analysis of financial statements and how to incorporate it into your company’s accounting practices. You will also learn how to do horizontal analysis using an income statement and a balance sheet.
While vertical analysis focuses on the relationships between different variables in your financial statements, horizontal analysis focuses on changes to specific variables over time by expressing the difference in their values as a percentage or an absolute value. That’s exactly why it’s called horizontal analysis – you compare the data from each period side by side to calculate your results.
You can do horizontal analysis using only two periods for the comparison, but it’s highly recommended you use more to avoid drawing and acting on less accurate conclusions.
Horizontal analysis is often referred to as trend analysis, but the latter term has broader applications and is not specific to financial statements. As the name suggests, trend analysis involves identifying trends and predicting outcomes, which requires analyzing data from multiple consecutive periods.
Select the base and comparison periods and the values for your chosen variable, then calculate the percentage change between them. Calculating this involves subtracting the base period’s value from the comparison period‘s value, dividing the result by the base period’s value, then multiplying by 100.
percentage change = ((comparison value – base value) / base value) * 100)
Now that you know how to calculate percentage change, you can read about all the steps involved in horizontal analysis in the next section.
The horizontal analysis of financial statements is a relatively straightforward process. As you saw in the previous section, the calculations involved are simple. You can easily set up a template in a spreadsheet to speed up the process. Your focus should be on analysis and interpretation, including which variables and periods you choose. In the next section, I will apply these steps to two different examples: the first with an income statement and the second with a balance sheet.
First, decide which periods you will be comparing, carefully choosing comparable periods. For example, if your industry is seasonal, comparing consecutive quarters would provide misleading results. It would make more sense to compare the values for a specific quarter to the same quarter from past years. If you happen to choose a particularly bad time period for your base values, the values for your comparison period may look much better than they are.
The next step is to identify the data you need. Depending on the metrics you want to focus on, you will need different financial statements, like balance sheets, income statements, or cash-flow statements.
Once you have your company’s values for the variables of interest, you need to find those of similar companies in your industry for the selected time periods. Sometimes you may find horizontal analysis reports, saving you the calculations, but you can always calculate the percentage change yourself using publicly available financial data. Remember to choose companies with similar characteristics for useful comparisons.
It’s possible to do horizontal analysis using absolute change values instead of the percentage change. However, expressing the change as a percentage tends to be more useful, as it allows you to easily compare to other companies and study proportional change. For each variable, calculate the percentage change using the formula:
Now that you have the percentage change values for your chosen variables – both for your company and others in the same industry – it’s time to analyze your company’s values and those of your competitors. This will allow you to interpret these results within as comprehensive a context as possible.
In the next section, you have step-by-step instructions on how to do horizontal analysis with examples using a balance sheet and an income statement.
Google Sheets offers plenty of Data Analysis features that we can use to make sense of large data sets. Here’s how to do Data Analysis in Google Sheets.
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Fortunately, tools like Google Sheets or Excel allow you to set up templates, so you can forget about the calculations and focus on analysis. Using Layer, you can also automate data flows and user management, so you can gather the data automatically, carry out the analysis, and automatically share results and reports with the right users.
The two examples below show how to do horizontal analysis using Google Sheets, but you can easily do the same in Excel. The first example is based on a balance sheet, and the second is on an income statement.
You can download the templates for free:
In this first example, I will be doing a horizontal analysis of Company A’s revenue based on its annual income statement.
For this example, I will carry out the analysis of the data reported for 2021 and 2022. However, you can do this quickly for multiple years, particularly if you’re interested in long-term trends.
I can find the data I want to analyze for 2021 and 2022 at the top of the income statement: ‘Revenue’.
Horizontal Analysis – Income Statement Revenue Data
Insert a column to the right of ‘2022’ and click on the cell corresponding to the first revenue line item.
Horizontal Analysis – Income Statement Add Column
Type in the equal sign, then the % change formula using cell references.
Horizontal Analysis – Income Statement Add Formula
Drag down the cell with the formula to copy it to the other revenue line items, as well as the total net revenue.
Horizontal Analysis – Income Statement Results
Now that I have performed the required calculations on Company A’s data, I need to do the same for companies in the same industry that are similar to Company A. This will allow me to analyze and compare results in context, increasing the likelihood of an accurate interpretation.
Google Sheets allows you to import and link a specific range of cells from another spreadsheet. Here’s how to use the IMPORTRANGE function in Google Sheets
In this second example, I will do a horizontal analysis of Company B’s current assets based on the annual balance sheets.
For this example, the analysis will be carried out on the data reported for 2021 and 2022. However, you can do this very quickly for multiple years, particularly if you’re interested in long-term trends.
I can find the data I want to analyze for 2021 and 2022 at the top of the balance sheet: ‘Current Assets’.
Horizontal Analysis – Balance Sheet Data
Insert a column to the right of ‘2022’ and click on the cell corresponding to the first line item.
Horizontal Analysis – Balance Sheet Add Column
Horizontal Analysis – Balance Sheet Add Formula
Drag down the cell with the formula to copy it to the other current assets line items.
Horizontal Analysis – Balance Sheet Results
Now that I have performed the required calculations on Company B’s data, I need to do the same for companies in the same industry that are similar to Company B. This will allow me to analyze and compare results in context, increasing the likelihood of an accurate interpretation.
Horizontal analysis can help you identify trends in your data using your financial statements. Using Excel or Google Sheets is a great way to carry out a horizontal analysis of financial statements, especially if you use a pre-made template. If you use Layer, you can even automate parts of this process, including the control of data flows, calculations, and sharing the results.
You now know how to do a horizontal analysis of data from your financial statements. You know how to do horizontal analysis using Excel and Google Sheets, using both an income statement and a balance sheet. Check out the following article for more finance-related how-to’s:
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Financial analysis plays a crucial role in assessing the performance and financial health of a company. One essential technique in financial analysis is horizontal analysis , which allows you to analyze and interpret changes in financial statement data over time. In this guide, we will provide you with a comprehensive understanding of horizontal analysis , its significance, and how to conduct it effectively.
Horizontal analysis, also known as trend analysis , is a financial analysis technique that compares and evaluates the changes in financial statement data over a specific period. It involves analyzing year-to-year variations in financial metrics to identify trends, patterns, and shifts in a company’s financial performance. By examining the historical data and calculating percentage changes, horizontal analysis helps in understanding the direction and magnitude of changes, enabling informed decision-making and strategic planning .
Horizontal analysis plays a crucial role in financial analysis for several reasons:
Overall, horizontal analysis is a valuable tool in financial analysis as it allows for the identification of trends, assessment of performance, detection of anomalies, comparative analysis , strategic planning, and effective communication. By leveraging the insights gained from horizontal analysis, businesses can make informed decisions, mitigate risks, and drive sustainable growth.
How to do horizontal analysis.
Horizontal analysis, also known as trend analysis , involves the comparison of financial statement data across multiple periods to identify trends, patterns, and changes. By examining year-to-year changes in key financial metrics, you can gain insights into a company’s growth, stability, and overall performance.
To perform horizontal analysis, follow these steps:
Horizontal analysis serves several important objectives in financial analysis:
Horizontal analysis involves the analysis of various financial statements:
To conduct horizontal analysis effectively, follow this step-by-step process:
Start by choosing the financial statements that are relevant to your analysis objectives. Consider which statements provide the most meaningful insights based on your analysis goals.
Collect the historical financial data for the selected periods. Ensure the accuracy and completeness of the data, as any inaccuracies can affect the analysis results.
If inflation has influenced the financial data, it is essential to adjust the figures to account for its impact. One common method is using an inflation index or Consumer Price Index (CPI) to calculate the inflation-adjusted values.
Calculate the year-to-year changes by comparing the financial data for each period. This can be done by using the following formula:
(CurrentPeriodValue−PreviousPeriodValue)/PreviousPeriodValue×100
For example, to calculate the percentage change in revenue :
(2021 R e v e n u e − 2020 R e v e n u e ) /2020 R e v e n u e × 100
Analyze the calculated percentage changes and interpret the results. Look for significant variations, both positive and negative, and identify any trends or patterns that emerge.
When interpreting the results of horizontal analysis, consider the following key aspects:
Analyzing the year-to-year changes helps identify long-term trends and patterns. Look for consistent positive or negative changes in financial metrics to assess the overall direction and performance of the company.
Carefully examine the percentage changes to understand the magnitude and significance of variations. Look for major fluctuations that may indicate critical events or shifts in the company’s operations.
Not all variations in financial metrics are equally significant. Evaluate the size of the changes relative to the company’s size, industry benchmarks, and historical performance. Smaller variations may be within an acceptable range, while larger variations may require further investigation.
Horizontal analysis provides insights into a company’s financial performance and health. By assessing the changes in revenues, expenses, profits , assets, and liabilities, you can gauge the overall financial well-being of the organization.
Several key metrics and ratios are used in horizontal analysis to evaluate financial performance:
Common-size financial statements express each line item as a percentage of a base amount, typically total revenue or total assets. This allows for easy comparison and identification of trends across different periods.
Percentage changes show the year-to-year variations in financial metrics and help determine the growth or decline rate of the company’s performance.
CAGR measures the average annual growth rate of a financial metric over a specific period. It helps determine the consistent growth rate, smoothing out fluctuations in year-to-year changes.
Variance analysis compares actual financial performance with the expected or budgeted performance. By identifying and analyzing variances, you can gain insights into the factors driving the deviations from the planned targets.
Trend analysis examines the direction and magnitude of changes in financial metrics over an extended period. It helps identify recurring patterns and assess the long-term performance of the company.
Advantages of horizontal analysis.
Horizontal analysis offers several advantages in financial analysis:
Despite its benefits, horizontal analysis has some limitations and challenges that need to be considered:
To gain further insights from horizontal analysis, consider industry benchmarking and peer analysis:
Benchmark the company’s financial performance against industry averages or key competitors. This helps identify areas where the company excels or lags behind the industry norms.
Analyze the financial statements of key competitors to gain a broader understanding of industry dynamics and identify areas for improvement or potential competitive advantages.
Utilize financial ratios , such as profitability ratios , liquidity ratios , and solvency ratios , to compare the company’s financial performance with industry benchmarks and competitors. This provides a comprehensive view of the company’s relative strengths and weaknesses.
To ensure accurate and meaningful results in horizontal analysis, follow these best practices:
To further illustrate the practical application of horizontal analysis, let’s explore a few more examples that showcase its effectiveness in assessing financial performance and identifying trends.
Let’s consider Company A, a technology firm, and analyze its revenue trends over a five-year period using horizontal analysis. Here’s a simplified representation of their revenue data:
Year | Revenue (in millions) |
---|---|
2019 | $100 |
2020 | $120 |
2021 | $150 |
2022 | $180 |
2023 | $200 |
By calculating the year-to-year percentage changes, we can assess the revenue growth rates:
Through horizontal analysis, we observe that Company A has experienced consistent revenue growth over the five-year period. The growth rates of 20%, 25%, 20%, and 11.11% indicate a positive trend in the company’s revenue generation.
Let’s consider Company B, a retail company, and analyze its expense trends over a three-year period. Here’s a simplified representation of their expense data:
Year | (in millions) |
---|---|
2019 | $50 |
2020 | $55 |
2021 | $60 |
By calculating the year-to-year percentage changes, we can assess the expense growth rates:
Based on the horizontal analysis, we observe that Company B’s operating expenses have gradually increased over the three-year period. The growth rates of 10% and 9.09% indicate a consistent upward trend in the company’s expenses.
Let’s consider Company C, a manufacturing company, and analyze its total assets over a four-year period. Here’s a simplified representation of their asset data:
Year | Total Assets (in millions) |
---|---|
2019 | $500 |
2020 | $550 |
2021 | $600 |
2022 | $650 |
By calculating the year-to-year percentage changes, we can assess the asset growth rates:
From the horizontal analysis, we observe that Company C has experienced consistent growth in total assets over the four-year period. The growth rates of 10%, 9.09%, and 8.33% indicate a positive trend in the company’s asset accumulation.
These examples demonstrate how horizontal analysis enables us to identify trends and patterns in various financial metrics. By analyzing changes in revenue, expenses, and assets over time, companies can make informed decisions and better understand their financial performance.
Horizontal analysis is a powerful tool for understanding and evaluating a company’s financial performance over time. By examining year-to-year changes in key financial metrics, you can identify trends, assess stability, and make informed business decisions. Remember to consider industry benchmarks, peer analysis, and best practices to ensure accurate and meaningful results. By incorporating horizontal analysis into your financial analysis toolkit, you can gain valuable insights into your company’s performance and drive strategic growth.
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What is vertical analysis, horizontal analysis vs vertical analysis, steps to conduct horizontal analysis, step 1: gather the necessary financial statements, step 2: choose a base year for comparison, step 3: calculate the percentage changes in financial line items, step 4: analyze the trends and patterns identified through horizontal analysis, step 5: interpret the findings and draw conclusions, key benefits of horizontal analysis, identification of trends, performance evaluation, strategic decision-making, forecasting, best practices for horizontal analysis, use consistent time intervals, choose relevant financial line items, consider industry benchmarks and compare with competitors, account for external factors influencing financial trends, supplement with other analysis techniques, common challenges and pitfalls.
What is the difference between horizontal analysis and vertical analysis, can horizontal analysis be applied to non-financial data, how frequently should horizontal analysis be performed, are there any software tools available for conducting horizontal analysis, key takeaways.
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Home › Finance › Financial Ratio Analysis › What is Horizontal Analysis?
Definition: Horizontal analysis, sometimes called trend analysis, is the process of comparing line items in comparative financial statements or financial ratios across a number of years in an effort to track the history and progress of a company’s performance. In other words, it’s a way for analysts to compare accounts or performance metrics over time to see if the company is improving or declining.
This formula for evaluation is typically done by either investors and internal company management since both need to understand how well a company is doing in order to make decisions. Investors have to make the decision whether or not they want to invest or sell their current investment; while management needs to know what moves to make in order to improve the future performance of the company.
Since, any line item in a financial statement or financial ratio can be compared across a period of time, it makes the horizontal analysis extremely useful for anyone trying to track a company’s performance over time.
An investor can see if a business is expanding and becoming more valuable or becoming less efficient and less valuable. For example, an investor can use the horizontal analysis of the balance sheet to track the earnings per share ratio on a company he is thinking about investing in. If the ratio continues to grow year over year, the investor’s analysis would show a positive trend and he would probably choose to invest in the company granted other metrics are equally as positive.
A manager, on the other hand, is concerned with the day-to-day operations of the company, so he uses this evaluation technique to pinpoint areas for improvement. For instance, a manager might compare cost of goods sold and profit margin over a two or three-year span to see how efficient the company is becoming. This comparison of income statements will give the manager not only a benchmark for future performance; it will also help him understand what needs to be changed in the future.
Alhtough this comparison is useful on its own, investors and management typically use both horizontal and vertical analysis technuques before making any decisions.
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While analyzing financial statements, horizontal analysis is used to analyze historical data from various accounting periods, such as ratios or line items. In a horizontal analysis, comparisons can be done using either absolute comparisons or percentage comparisons. In the latter case, the statistics from each succeeding period are expressed as a percentage of the baseline year's total, with 100% serving as the baseline value. This is also known as base-year analysis.
To understand what has been affecting a company's financial performance over a period of years, investors and analysts can use horizontal analysis to detect trends and growth patterns. Analysts can evaluate relative changes in various line items over time and forecast them into the future using this sort of analysis. A thorough picture of operational outcomes is provided by a time-series analysis of the income statement, balance sheet, and cash flow statement, which exposes what motivates a company's success and if it is profitable and functioning efficiently.
The percentage changes in specific financial statement figures are indicated in the U.S. Selecting the base year and comparative year is the first step in computing the percentage change. Then, divide the result by the base year to arrive at the dollar change by deducting the value from the base year from the comparative year. Next, the outcome is multiplied by 100.
Formula To Calculate Horizontal Analysis Percentage
Amount In Comparison Year - Amount In Base Year/Amount In Base Year * 100
Formula To Calculate Horizontal Analysis Dollars
Amount In Comparison Year - Amount In Base Year
When reviewing a company's financial statements over a number of periods, horizontal analysis is utilized.
The most common way to represent it is as a percentage increase over the identical line item in the base year.
Users of financial statements can quickly see trends and growth patterns thanks to horizontal analysis.
A company's growth and financial situation in relation to competitors are displayed via horizontal analysis.
If certain historical eras of underperformance are chosen as a comparison, horizontal analysis can be used to make the current period appear better.
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Horizontal analysis a type of financial analysis which involves calculating changes in financial position and performance of a company across time. Together with vertical analysis, it forms the core of the common-size analysis.
Unlike the vertical analysis which is more useful in comparing companies at a single point of time, horizontal analysis is useful when we want to know how two or more companies have done over time.
Depending on the financial statement being analyzed, horizontal analysis can be carried out in a number of ways. For example, a balance sheet horizontal analysis can be carried out by finding percentage change in each line item using the following formula:
$$ \text{Percentage Change} = \frac{\text{Recent Value} - \text{Previous Value}}{\text{Previous Value}} $$
A positive change means that the line item has increased and a negative change means it has decreased.
When analyzing more than more periods, it is often useful to divide the value for each period by the value in the beginning period.
$$ \text{Horizontal Analysis Factor} = \frac{\text{Recent Value}}{\text{Previous Value}} $$
If the value is greater than 1, it means that the line has increased, and if it is lower than 1 it means it has decreased. It is particularly useful when looking at multiple periods because it allows us to see financial position and performance at each point of time relative to the starting point of time. In multiple period analysis, percentage values might be misleading. For example, if a Company had revenue of $20 million, $18 million and $20 million in Year 1, Year 2 and Year 3, the percentage changes would be -10% and 11.11% giving an increase of a net growth of 1.11% even though there has been a net zero growth over the 3-year period.
The following example shows horizontal analysis of an income statement over a single period based on percentage change method.
Year Ended Dec. 31 | Change | |||
---|---|---|---|---|
20X1 | 20X2 | Absolute | Percent | |
Sales | $416,000 | $587,000 | $171,000 | 41.1 |
Cost of Sales | 255,000 | 328,500 | 73,500 | 28.8 |
Gross Profit | 161,000 | 258,500 | 97,500 | 60.6 |
Selling Expenses | 42,500 | 61,200 | 18,700 | 44.0 |
Administrative Expenses | 62,000 | 84,000 | 22,000 | 35.5 |
Operating Income | 56,500 | 113,300 | 56,800 | 100.5 |
Income Tax | 19,200 | 40,000 | 20,800 | 108.3 |
Net Income | 37,300 | 73,300 | 36,000 | 96.5 |
Horizontal analysis is useful in comparing firms across time regardless of their size because it converts financial performance to percentage or factors.
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Horizontal analysis of financial statements involves comparison of a financial ratio, a benchmark, or a line item over a number of accounting periods. This method of analysis is also known as trend analysis. Horizontal analysis allows the assessment of relative changes in different items over time. It also indicates the behavior of revenues, expenses, and other line items of financial statements over the course of time.
The analyzing accounting periods can be two or more than two periods. The accounting period can be a month, a quarter, or a year. It is up to the analyst's discretion to choose the appropriate number of accounting periods. During the investment appraisal, the number of accounting periods for analysis is based on the time horizon under consideration.
Horizontal analysis is a method of financial statement analysis that compares financial data from one period to another. This technique is used to identify trends or changes in a company's financial performance over time and can be applied to various financial statements. Horizontal analysis of financial statements can be performed on any of the item in the income statement, balance sheet and statement of cash flows . For example, this analysis can be performed on revenues, cost of sales, expenses, assets, cash, equity and liabilities. It can also be performed on ratios such as earnings per share (EPS), price earning ratio, dividend payout, and other similar ratio.
Horizontal analysis can be performed in one of the following two different methods i.e. absolute comparison or percentage comparison.
One way to perform a horizontal analysis is to compare the absolute currency amounts of some items over time. For example, the cash balance at the end of one accounting period can be compared to other accounting periods. This method is helpful in identifying the items that are changing the most.
The second method of horizontal analysis compares percentage differences in certain line items over a period of time. The absolute currency amounts are converted to percentages for comparison. For example, a change in cash from $5,000 to $5,500 is reported as a 10% increase in cash. It can also be reported as 110%, meaning that the cash is 110% of the cash at the end of the previous accounting period. This method is useful when comparing the performance of two companies of different scope and size.
Let's take an example of a company that has generated an income statement for the last two years.
Income Statement
Absolute comparison : By using horizontal analysis, we can compare the income statement from Year 1 to Year 2 and evaluate the changes in both absolute and percentage terms.
Percentage c omparison : From the above example, we can see that the company's revenue has increased by 20% from Year 1 to Year 2, while the cost of goods sold has increased by 17.14%. This means that the company's gross profit has increased by 26.67%. We can also see that the company's net income has increased significantly by 42.86%. This indicates that the company's cost-cutting efforts have been successful and the company has been able to improve its profitability over the past year.
As a result, horizontal analysis is a helpful tool for analysts and investors to spot trends in a company's financial performance over time. This method can be applied to assess a company's financial standing and assist investors in making defensible investment choices. Investors can discover potential risks and opportunities that could affect a company's future financial performance by comparing financial data from one period to the next.
Horizontal analysis and vertical analysis are two common methods of analyzing financial statements.
Horizontal analysis , also known as trend analysis, compares financial data over a specific period to identify changes and trends. The analysis compares line items from the same financial statement in different periods to identify whether there have been increases or decreases in the figures. The analysis can be conducted on both the income statement and the balance sheet, comparing the figures for multiple years or quarters.
For example, if a company’s revenue was $1 million in 2019 and $1.2 million in 2020, then the horizontal analysis would show a 20% increase in revenue. This method is useful for identifying trends and changes in a company’s financial performance.
On the other hand, vertical analysis , also known as common size analysis, involves analyzing financial statements by expressing each line item as a percentage of a base figure. The base figure can be either total assets for the balance sheet or total revenue for the income statement. The analysis provides insight into the relative importance of each item in the financial statement.
For example, if a company’s total assets are $10 million and inventory is $1 million, then the vertical analysis of the balance sheet would show inventory as 10% of total assets. This method is useful for comparing the relative importance of line items in the financial statement.
Both horizontal and vertical analysis are useful tools for analyzing financial statements and can be used together to gain a comprehensive understanding of a company’s financial performance. Horizontal analysis provides information on the trend of financial performance over time, while vertical analysis provides information on the relative importance of line items in the financial statement.
Horizontal and vertical analysis are commonly used by financial analysts, investors, and managers to gain insight into a company’s financial performance and to make informed decisions based on the analysis.
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Horizontal analysis, also known as trend analysis, is used to spot financial trends over a specific number of accounting periods. Horizontal analysis can be used with an income statement or a balance sheet.
At least two accounting periods are required for a valid comparison, though in order to spot actual trends, it’s better to include three or more accounting periods when calculating horizontal analysis.
How detailed your initial financial statements are depends largely on the accounting software application you’re using. If you’re using an entry-level application, it’s likely you’ll need to use spreadsheets in order to complete the horizontal analysis.
Horizontal, or trend, analysis is used to spot and evaluate trends over a specific period of time.
For instance, instead of creating a balance sheet or income statement for one specific period of time, you would also create a comparative income statement or balance sheet that covers quarterly or annual activity for your business.
The comparative statement is then used to highlight any increases or decreases over that specific time frame. This enables you to easily spot growth trends as well as any red flags that may need to be addressed.
Horizontal analysis uses a line-by-line comparison to compare the totals. For example, if you run a comparative income statement for 2018 and 2019, horizontal analysis allows you to compare revenue totals for both years to see if it increased, decreased, or remained relatively stagnant.
Adding a third year to the analysis will be even more helpful, as you’ll be able to see if there is a definite trend.
Horizontal analysis looks at changes line by line between specific accounting periods, usually quarterly or yearly, whereas vertical analysis restates balance sheet or income statement amounts as a percentage of total assets (balance sheet) or net sales (income statement).
While horizontal analysis is used to compare line items over specific periods of time in order to spot trends, vertical analysis is used to restate and compare changes in percentages, and is more frequently used by investors and creditors to compare company performance with other companies in the same industry.
Use the following steps to begin performing a horizontal analysis:
Step 1: Run a comparative income statement and balance sheet for the periods you wish to compare. You’ll need a minimum of two periods to compare, but you’ll be able to spot trends much better if you use at least three periods.
Step 2: Decide how you want to approach your horizontal analysis. You have several options:
$13,000 ÷ $54,000 x 100 = 24%
That means that from 2017 to 2018, your revenue increased by 24%.
To compare 2019 revenue to 2017 revenue, you’ll complete the following calculations:
$73,000 - $54,000 = $19,000 variance
$19,000 ÷ $54,000 x 100 = 35% increase in revenue
You can also choose to calculate income statement ratios such as gross margin and profit margin.
Horizontal Analysis - Income Statement
2017 | 2018 | 2019 | |
---|---|---|---|
Revenue | $54,000 | $67,000 | $73,000 |
Cost of goods sold | 22,000 | 29,000 | 31,000 |
Gross profit | 32,000 | 36,000 | 42,000 |
Sales and marketing | 1,000 | 2,200 | 3,500 |
Administrative | 900 | 1,100 | 2,100 |
Operating Expenses | 30,100 | 32,700 | 36,400 |
Depreciation | 150 | 550 | 1,250 |
Operating Income | 29,950 | 32,150 | 35,150 |
Interest Expense | 500 | 750 | 1,000 |
Income before taxes | 29,450 | 31,400 | 34,150 |
Income tax expense | 1,100 | 1,550 | 1,750 |
Net Income | 28,350 | 29,850 | 32,400 |
Step 3: Review your results. The quickest way to spot trends is to view the changes from period to period, but for more substantial analysis, you’ll want to view variances, either as dollar amounts or percentages.
If you’d rather see both variances and percentages, you can add columns in order to display changes in both. While this format takes the most time to create, it also makes it easier to spot trends and better analyze business performance. This method works best when you’re comparing two years side by side.
2017 (Base Year) | 2018 | Change $ | Change % | |
---|---|---|---|---|
Revenue | $54,000 | $67,000 | $13,000 | 24% |
Cost of goods sold | 22,000 | 29,000 | 7,000 | 32% |
Gross profit | 32,000 | 36,000 | 4,000 | 12.5% |
Sales and marketing | 1,000 | 2,200 | 1,200 | 120% |
Administrative | 900 | 1,100 | 200 | 22% |
Operating Expenses | 30,100 | 32,700 | 2,600 | 8.6% |
Depreciation | 150 | 550 | 400 | 266% |
Operating Income | 29,950 | 32,150 | 2,200 | 7.4% |
Interest Expense | 500 | 750 | 250 | 50% |
Income before taxes | 29,450 | 31,400 | 1,950 | 6.6% |
Income tax expense | 1,100 | 1,550 | 450 | 41% |
Net Income | 28,350 | 29,850 | 1,500 | 5.3% |
Using the comparative income statement above, you can see that your net income changed by $1,500 from 2017; a percentage increase of 5.3%, but what really stands out on the income statement is the 266% increase in depreciation expense.
If you purchased several fixed assets during 2018, the increase is easily explained, but if you didn’t, this would need to be researched.
Calculating the horizontal analysis of a balance sheet is a similar process. You can choose to run a comparative balance sheet for the periods desired, or complete a side-by-side comparison of two years.
The example from Safeway Stores shows a comparative balance sheet for 2018 and 2019 following a similar format to the income statement above.
This example from Safeway Stores shows a horizontal analysis balance sheet. Image source: Author
Source: playaccounting.com.
While financial statements are essential for managing your business, an income statement or balance sheet for a single period of time will not tell the complete story. Horizontal analysis answers a lot of questions, including:
There’s a reason horizontal analysis is often referred to as trend analysis. Looking at and comparing the financial performance of your business from period to period can help you spot positive trends, such as an increase in sales, as well as red flags that need to be addressed.
Whether you do a horizontal analysis quarterly or yearly, it’s worth the time and effort to perform this calculation regularly.
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Management accounting, horizontal analysis definition, steps to perform a horizontal analysis, how to perform horizontal and vertical analyses of income statements, related differences, company financial statement analysis: spotting future trends.
The paper analyses the financial input of R&D, capital and investment structure from the vertical and horizontal two aspects over the past decade. By comparing with other provinces at similar levels of economic development and the Asian tigers, it aims to find out the problems of input and give suggestions. Calculate the absolute change by deducting amount of base year from the amount of comparing year. Thanks to everyone that has a clear and detail explanation about the horizontal analysis with a best eg. What is vertical analysis if possible mention 1 or 2 examples here too. In the above example the amount of comparison year is the sales figure of 2008 then the amount must be $1,400,000. The answer of your question is in the last two lines of the main article.
The earlier year is typically used as the base year for calculating increases or decreases in amounts. In vertical analysis, one line on the financial statement shows a base figure of 100%, and the other lines represent a percentage of the base figure. For example, when you perform vertical analysis on a balance sheet, the base figure is the total assets or liabilities. In horizontal analysis, also known as trend analysis or time series analysis, financial analysts look at financial trends over periods of time—especially quarters or years. Typically, financial analysts perform horizontal analysis before vertical analysis, and it is usually the most useful for companies that have been operating for a long period of time. Consistency is important when performing horizontal analysis of financial statements. When the same accounting standards are used over the years, the financial statements of the company are easier to compare and trends are easily analyzed.
Horizontal analysis is used in the review of a company’s financial statements over multiple periods. Horizontal analysis is a financial analysis of the value of an income statement from a base year to a comparison year. In this analysis, the very first year is considered as the base year and the entities on the statement for the subsequent period are compared with those of the entities on the statement of the base period.
First, we need to take the previous year as the base year and last year as the comparison year. As we see, we can correctly identify the trends and develop relevant areas to target for further analysis. If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices. Or investigate to see if this situation is a coincidence based on other factors. And so we can see that Current Liabilities are 47% of Total Liabilities. As a administrator i am trying to provide you the the content easy to understand and remember. I always use easy English and simple examples from real life for better understanding.
You may also opt to calculate income statement ratios like gross margin and profit margin. You can also choose to calculate income statement ratios such as gross margin and profit margin. The comparative statement is then used to highlight any increases or decreases over that specific time frame. This enables you to easily spot growth trends as well as any red flags that may need to be addressed.
How do I compute for the percentage when years 2011, 2012 and 2013 are involved? If the base year amount is zero or negative, percentage change is not calculated.
Hi, I know how to calculate the change, but im not sure how to explain the change in words. I could easily grasp your explanations and appreciate every detail of your discussions. Can you put some info.regarding nonprofit organizations especially its IGPs on how to account for it and what relevant matters do i have to consider upon conducting a research about it. Get a daily selection of our top stories based on your reading preferences. We saved more than $1 million on our spend in the first year and just recently identified an opportunity to save about $10,000 every month on recurring expenses with PLANERGY. Mary Girsch-Bock is the expert on accounting software and payroll software for The Ascent.
To illustrate, consider an investor who wishes to determine Company ABC’s performance over the past year before investing. Assume that ABC reported a net income of $15 million in the base year, and total earnings of $65 million were retained. The company reported a net income of $25 million and retained total earnings of $67 million in the current year.
The unusual application of accounting standards may be described in the footnotes that accompany a firm’s financial statements. Common methods of financial statement analysis include fundamental analysis, DuPont analysis, horizontal and vertical analysis and the use of financial ratios. Historical information combined with a series of assumptions and adjustments to the financial information may be used to project future performance. The Chartered Financial Analyst designation is available for professional financial analysts. Horizontal Analysis doesn’t conclude with finding the change in sales over a period. To get a clear picture of the performance of our business, we need to do a horizontal analysis of each item in our income statement.
Both, however, are important when it comes to business decisions based on the performance. This is because the process establishes the relationship between the items in the profit and loss account and the balance sheet, hence identifying financial strengths as well as weaknesses. Various methods used in the analysis of financial statements include ratio, horizontal and vertical analysis. It helps investors analyze and ascertain whether the company has had consistent growth over the years and if they are utilizing fund available in a balanced way. The horizontal analysis as the name suggest is the analysis done on horizontal basis for the same item of a company’s financial statements generally for two or more years. It analyses the trend of the company by calculating the change percentage between the same line item for various years. On the other hand the vertical analysis is done by comparing the line items vertically in a financial statement with the total of either sales or assets .
In addition, the use of horizontal analysis makes it easier to project trends into the future. Yet another advantage of this form of data presentation is when trends can be compared to those of competitors or industry averages, to see how well an organization’s performance compares with that of other entities. A horizontal analysis can be particularly illuminating when it includes calculations of key ratios or margins, such as the current ratio, interest coverage ratio, gross margin, and/or net profit margin. In particular, take note of any measurements included in a company’s loan covenants, since it makes sense to monitor trends in these measurements that could lead to a covenant breach. This type of presentation makes it easier to spot declining margins and/or liquidity problems early and make corrections before they can become serious concerns. Horizontal analysis is used for evaluating trends Year over Year or Quarter over Quarter .
Those who wish to invest can use horizontal analysis to determine the performance status of a company. The technique shows whether or not the company is expanding and appreciating in terms of value. Therefore, an investor can easily track a company’s earnings per share ratio, using this analysis balance sheet before making an investment decision. If the analysis shows constant growth year after another, it means that there is a positive trend. So, any investor would most likely prefer to invest in the company and vise versa.
This is because vertical analysis expresses each line in the financial statements as a percentage of a base value, like sales. Understanding horizontal and vertical analysis https://www.bookstime.com/ is essential for managerial accounting, because these types of analyses are useful to internal users of the financial statements , as well as to external users.
On the other hand, the sales decline was $25,000 ($500,000 to $475,000). The decrease in sales has a bigger impact on the net income decline, when dollars are considered. Add horizontal analysis to one of your lists below, or create a new one.
You can make your current year look better if you choose historical periods of poor performance as your base comparison year. Generally, horizontal analysis work is to calculate the percentage changes and amount in financial figures from one year to the other. The objective for comparing is to determine the change in financial figures and the direction of those particular changes in any given company. The analysis is commonly used by internal company management and investors. Individuals who want to invest in a certain firm have to make up their minds on whether to sell their current shares or buy more. When it comes to management, it identifies which moves to make so that it can improve its company’s future performance.
On the other hand, vertical analysis is used in the comparison of a financial item as a percentage of the base figure, commonly total liabilities and assets. Horizontal analysis refers to the comparison of financial information such as net income or cost of goods sold between two financial quarters including quarters, months or years. A good way to do some ratio and trend analysis work is to prepare both horizontal and vertical analyses of the income statement. Both analyses involve comparing income statement accounts to each other in dollars and in percentages. The significant increase in cash is due to the collection of account receivable, issue of common stock, sale of goods and fixed assets. However the company is not utilizing the cash to meet the current liabilities which is not good for the business.
You now understand the three fundamental elements of a trend: basic human needs; change (both longer-term shifts and short term triggers); innovations and can identify points of tension and emerging customer expectations, which are where the key opportunities lie when it comes to consumer trends.
The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Regardless of how useful trend analysis may be, it is regularly criticized.
They can use them internally to examine issues such as employee performance, the efficiency of operations and credit policies. They can use them externally to examine potential investments and the creditworthiness of borrowers, amongst other things. Comparison of two or more year’s financial data is known ashorizontal analysisortrend analysis. The above example of Horizontal analysis shows us that a 66% increase in sales led to a 60% increase in net profits.
The content on finmasters.com is for educational and informational purposes only and should not be construed as professional financial advice. Finmasters is not a financial institution and does not provide any financial products or services. We strive to provide up-to-date information but make no warranties regarding the accuracy of our information. This can obviously be a big barrier to entry to investors wanting to get in on a business like Google. This causes difficulties since it’s hard to compare companies of different sizes. An earnings recast is the act of amending and re-releasing a previously released earnings statement, with specified intent. Financial statement analyses are typically performed in spreadsheet software and summarized in a variety of formats.
It compares each line item to the total and calculates what the percentage the line item is of the total. It can be done with the company’s Financial Statements or with the use of the Common Size Statements. Horizontal analysis is facilitated by showing changes between years in both dollar and percentage form as has been done in the example below. Showing changes in dollar form helps the analyst focus on key factors t hat have affected profitability or financial position. Observe in the example that sales for 2002 were up $4 million over 2001, but that this increase in sales was more than negated by a $4.5million increase in cost of goods sold. Showing changes between years in percentage form helps the analyst to gain perspective and to gain a feel for the significance of the changes that are taking place.
Trends are used when projecting future performance and analysts use them to identify where they believe the business is within the business cycle. The component of “time” in financial statement analysis holds a great deal of weight. This is because businesses go through several stages throughout their lives. One of the overall goals of horizontal analysis is to help users gauge what stage the business is in.
The depth of analysis performed on the available data is therefore the key to identifying the issues that a company faces, and the necessary steps to overcome them. The quality of the analysis of “what gets measured” will then define the success of the action plans designed to “get it managed”. In this post and the next we will describe the two most widely known methods to analyze financial data – horizontal and vertical analysis – and provide examples to clarify their uses and calculations. The following figure is an example of how to prepare a vertical analysis for two years. As with the Horizontal Analysis , you need to use more years for any meaningful trend analysis. This figure compares the difference in accounts from 2014 to 2015, showing each account as a percentage of sales for each year listed. To prepare a vertical analysis, you select an account of interest and express other balance sheet accounts as a percentage.
Adding a third year to the analysis will be even more helpful, as you’ll be able to see if there is a definite trend. FREE INVESTMENT BANKING COURSELearn the foundation of Investment banking, financial modeling, valuations and more.
Tesla ( TSLA ) shares jumped on Monday after Morgan Stanley named the EV maker its top U.S. automaker pick, replacing Ford ( F ). The investment bank touted the company’s energy business, arguing that it could surpass its vehicle business in value over time as investors gravitate to firms that address climate-related issues.
The bank also pointed out that Tesla could boost its zero-emission vehicle credit revenue as traditional automakers scale back their EV production plans amid a slump in demand and intensifying competition within the industry.
Tesla shares gained 5.6% to $232.10 on Monday, the latest in a series of big moves this month. The stock started the month below $200 and added 37% by July 11 amid optimism about better-than-expected vehicle delivery numbers. The stock then gave back much of that gain by last week amid a broader tech sector selloff and following a disappointing earnings report .
Below, we take a closer look at the EV maker’s chart and turn to technical analysis to point out important price levels that may come into play as the company navigates the road ahead.
Tesla shares broke above a descending channel on above-average volume earlier this month, but have since retraced to the pattern’s top trendline, potentially flipping the area from prior resistance into future support .
Importantly, investors have defended this level in recent trading sessions, suggesting the current pullback may have concluded.
Moreover, the 50-day moving average (MA) crossed above the 200-day MA in Monday’s trading session to generate a golden cross , a bullish chart pattern signaling the start of a new uptrend.
If the price continues higher, investors should monitor three key areas on the chart where Tesla shares may encounter overhead selling pressure.
An initial resistance level sits around $300, an area on the chart where market participants may be happy to book profits near a multi-year horizontal line connecting multiple peaks and troughs from December 2021 to July last year.
Further upside could drive a move up to the $384 region, where the shares may attract sellers near the April 2022 swing high that formed in the early part of the stock’s downtrend between November 2021 and January 2023. Interestingly, a bars pattern, which extracts the two bullish moves in the stock from January to July last year and positions them from the April swing low, projects a target just below this level.
Finally, a breakout above this location could lead to a retest of $415 level, where Tesla shares would likely face significant resistance around their all-time high (ATH) set in early November 2021. Such a move would imply upside of nearly 80% from Monday’s closing price.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.
As of the date this article was written, the author does not own any of the above securities.
Reuters. " Tesla Jumps on Replacing Ford as Morgan Stanley's 'Top Pick' in US Auto Sector ."
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Land cover and socioeconomic analysis for recommended flood risk reduction strategies in java island, indonesia.
2. materials and methods, 2.1. study area, 2.2. method framework and materials, 2.2.1. outline, 2.2.2. materials, 2.3. analysis, 2.3.1. flood exposure analysis, 2.3.2. comprehensive analysis of exposed socioeconomic vulnerability, 3.1. flood exposure analysis result, 3.2. population distribution characteristics analysis result, 3.2.1. the population composition by land cover type, 3.2.2. cluster analysis for the population composition by land cover type, 3.3. comprehensive analysis result, 3.3.1. statistically significant correlations, 3.3.2. analysis focused on cluster classification with the land cover component, 4. discussion.
Author contributions, institutional review board statement, informed consent statement, data availability statement, acknowledgments, conflicts of interest.
Click here to enlarge figure
Group | Name | Data Type | Target Year |
---|---|---|---|
Hazardous area data | inaRISK floodhazard vulnerability (layer_bahaya_banjir_bandang) | Raster dataset, resolution: 3 arc-second | - |
Population data | Indonesia 100 m population | Raster dataset, resolution: 3 arc-second | 2020 |
Land cover | Land cover of Indonesia—GlobCover (22 classes) | Polygon dataset, resolution: 300 m | 2005 |
Socioeconomic data | Total population Percentage of population by age group (0–14, 15–64, 65–) Population of poor people | Text data Read and input the numbers in the table shown in the PDF of statistical reports published for each administrative division. | 2021 |
Expenditures per month in B40, M40, and T20 categories Percentage of population aged 15 and over per educational rank | |||
Percentage of population aged 15 and over per educational rank in B40, M40, and T20 categories | Excel download data from website | 2020 | |
Gross Regional Domestic Product (administrative district per person) | Excel download data from website | 2020 |
Number_Variable Name | Mean | S.D. | Description (Unit, Definition) | Official Data | Analysis Result |
---|---|---|---|---|---|
X01_Pop_fix | 1,294,377 | 855,313 | Total population by administrative district based on statistical data (people) | Yes | |
X02_Age0–14 | 22.1 | 2.4 | Percentage of population under 14 years old (%) | Yes | |
X03_Age15–64 | 69.3 | 2.2 | Percentage of population from 15 to 64 years old (%) | Yes | |
X04_Age65– | 8.6 | 2.8 | Percentage of population over 65 years old (%) | Yes | |
X05_Pop_15- | 998,405 | 635,750 | Population over 15 years old (people) | Yes | |
X06_Poor_Pop | 116,628 | 74,635 | Population of poor people (people) | Yes | |
X07_Poor_ratio | 9.3 | 3.4 | Poor population ratio (%, X07 = X06/X01) | ||
X08_Pop_sum | 1,332,225 | 1,016,048 | Total population from flood exposure analysis | Yes | |
X09_Pep_sum | 359,683 | 386,969 | Potentially exposed population (Pep) from flood exposure analysis | Yes | |
X10_expose_ratio | 26.5 | 16.0 | Exposure ratio for flood hazard (%, X10 = X09/X08) | Yes | |
X11_Pop_Ed_NoSch | 134,010 | 101,533 | Population aged 15 and over without an elementary school graduation certificate (people) | ||
X12_Pop_Ed_El_Sch | 271,562 | 202,275 | Population aged 15 and over with elementary school graduation (people) | ||
X13_Pop_Ed_JH_Sch | 226,010 | 149,897 | Population aged 15 and over with junior high school graduation (people) | ||
X14_Pop_Ed_SH_Sch | 369,061 | 309,812 | Population aged 15 and over with high school graduation and above (people) | ||
X15_Pop_B40_NoSch | 68,417 | 49,745 | Population aged 15 and over without an elementary school graduation certificate (people), B40 class | ||
X16_Pop_B40_El_Sch | 125,381 | 94,096 | Population aged 15 and over with elementary school graduation (people), B40 class | ||
X17_Pop_B40_JH_Sch | 97,602 | 69,240 | Population aged 15 and over with junior high school graduation (people), B40 class | ||
X18_Pop_B40_SH_Sch | 108,857 | 92,817 | Population aged and 15 over with high school graduation and above (people), B40 class | ||
X19_Pop_M40_NoSch | 50,416 | 39,843 | Population aged 15 and over without an elementary school graduation certificate(people), M40 class | ||
X20_Pop_M40_El_Sch | 110,221 | 83,378 | Population aged 15 and over with elementary school graduation (people), M40 class | ||
X21_Pop_M40_JH_Sch | 91,572 | 59,572 | Population aged 15 and over with junior high school graduation (people), M40 class | ||
X22_Pop_M40_SH_Sch | 148,048 | 129,989 | Population aged and 15 over with high school graduation and above (people), M40 class | ||
X23_Pop_T20_NoSch | 16,337 | 14,242 | Population aged and 15 over without an elementary school graduation certificate (people), T20 class | ||
X24_Pop_T20_El_Sch | 37,471 | 29,468 | Population aged 15 and over with elementary school graduation (people), T20 class | ||
X25_Pop_T20_JH_Sch | 37,665 | 25,074 | Population aged 15 and over with junior high school graduation (people), T20 class | ||
X26_Pop_T20_SH_Sch | 108,655 | 86,766 | Population aged and 15 over with high school graduation and above (people), T20 class | ||
X30_B40_Cost_Rp | 589,141 | 169,366 | Expenditures per household member in class B40 per month (Rp) | Yes | |
X31_M40_Cost_Rp | 1,162,257 | 402,502 | Expenditures per household member in class M40 per month (Rp) | Yes | |
X32_T20_Cost_Rp | 2,810,395 | 1,192,257 | Expenditures per household member in class T20 per month (Rp) | Yes | |
X33_Total.Annual.Expenditure_BRp | 19,647 | 16,957 | Total annual expenditure of the total population (billion Rp) | ||
X34_GRDP_BRp | 81,311 | 126,834 | Gross Regional Domestic Product (BRp) | Yes | |
X35_Income_per_person_TRp | 60,893 | 84,374 | GRDP divided by population (TRp) | Yes | |
X36_Income_Expenditure_Ratio | 3.9 | 5.5 | Ratio of total income to total expenses (X36 = X34/X33) | ||
X40_Ed_NoSch | 13.3 | 7.1 | Percentage of the population aged 15 and over without an elementary school graduation certificate (%) | Yes | |
X41_Ed_El_Sch | 26.1 | 9.7 | Percentage of the population aged 15 and over with elementary school graduation (%) | Yes | |
X42_Ed_JH_Sch | 22.2 | 2.6 | Percentage of the population aged and 15 over with junior high school graduation (%) | Yes | |
X43_Ed_SH_Sch | 38.3 | 15.4 | Percentage of the population aged 15 and over with high school graduation and above (%) | Yes | |
X44_B40_NoSch | 17.3 | 8.4 | Percentage of the population aged 15 and over without an elementary school graduation certificate (%), B40 class | Yes | |
X45_B40_El_Sch | 30.1 | 9.3 | Percentage of the population aged 15 and over with elementary school graduation (%), B40 class | Yes | |
X46_B40_JH_Sch | 24.0 | 3.1 | Percentage of the population aged 15 and over with junior high school graduation (%), B40 class | Yes | |
X47_B40_SH_Sch | 28.6 | 13.3 | Percentage of the population aged 15 and over with high school graduation and above (%), B40 class | Yes | |
X48_M40_NoSch | 12.4 | 7.0 | Percentage of the population aged 15 and over without an elementary school graduation certificate (%), M40 class | Yes | |
X49_M40_El_Sch | 26.4 | 10.7 | Percentage of the population aged 15 and over with elementary school graduation (%), M40 class | Yes | |
X50_M40_JH_Sch | 22.6 | 3.2 | Percentage of the population aged 15 and over with junior high school graduation (%), M40 class | Yes | |
X51_M40_SH_Sch | 38.6 | 17.0 | Percentage of the population aged 15 and over with high school graduation and above (%), M40 class | Yes | |
X52_T20_NoSch | 8.0 | 5.5 | Percentage of the population aged 15 and over without an elementary school graduation certificate (%), T20 class | Yes | |
X53_T20_El_Sch | 18.2 | 9.5 | Percentage of the population aged 15 and over with elementary school graduation (%), T20 class | Yes | |
X54_T20_JH_Sch | 18.4 | 4.7 | Percentage of the population aged and 15 over with junior high school graduation (%), T20 class | Yes | |
X55_T20_SH_Sch | 55.4 | 17.3 | Percentage of the population aged 15 and over with high school graduation and above (%), T20 class | Yes | |
X60_Pepp | 30,114 | 25,998 | Potentially exposed poor population (people, X60 = X06 × X10) | Yes | |
X61_Eexp_BRp | 27,374 | 58,742 | Exposed economy (BRp, X61 = X34 × X10) | Yes |
Strategy | Advantage | Weakness |
---|---|---|
Early Warning Systems | Timely alerts, Potential for reducing casualties. | Dependence on infrastructure, False alarms. |
Infrastructure Development | Enhanced resilience, Protection of assets. | High cost, Environmental impact. |
Community Engagement and Preparedness | Empowering communities, Local knowledge. | Variable community response, Resource constraints. |
Land Use Planning and Zoning | Mitigation of exposure, Sustainable development. | Implementation challenges, Resistance. |
Insurance and Risk Transfer Mechanisms | Financial protection, Incentive for risk reduction. | Limited coverage, Affordability. |
Ecosystem-Based Approaches | Natural flood defenses, Ecological benefits. | Time-intensive, Potential conflicts. |
Strategy | Consideration | Cluster |
---|---|---|
Early Warning Systems | Early warning systems offer timely alerts and the potential to reduce casualties, making them valuable tools for disaster preparedness. However, their effectiveness is contingent upon robust infrastructure and the risk of false alarms. In urban areas, where populations are densely concentrated and infrastructure is relatively well developed, early warning systems can play a pivotal role in minimizing flood impacts. In rural areas, it is expected that the response will take the form of indigenous local knowledge (ILK) rather than modern early warning systems. | Cluster 4 |
Infrastructure Development | Infrastructure development, such as flood barriers and drainage systems, can enhance resilience and protect assets against flood hazards. In urban areas, there are many assets exposed to flooding, so it is worthwhile to invest in preventing this. Nevertheless, the high cost and environmental impact associated with large-scale infrastructure projects pose significant challenges. In agricultural areas, where populations are distributed across mosaic croplands and rainfed croplands, targeted infrastructure investments can bolster flood resilience while supporting livelihoods. | Clusters 1, 2, 3, and 4 |
Community Engagement and Preparedness | Engaging communities in disaster preparedness initiatives empowers residents and leverages their invaluable knowledge of the terrain. However, community responses may vary, and resource constraints can impede effective implementation. In rural areas, where populations rely heavily on agriculture and have limited access to formal resources, community-based approaches can foster resilience and facilitate rapid response during flood events. | Clusters 1, 2, and 3 |
Land Use Planning and Zoning | The rainfed croplands and urban areas tend to have higher exposure rates to flooding. Land use planning and zoning measures, including floodplain regulations and green infrastructure implementation, can mitigate exposure to flood hazards while promoting sustainable development in floodplains and urban areas. Nevertheless, implementation challenges and resistance from stakeholders may hinder effective land use planning efforts. In forested areas and urban fringes, where ecosystems play a crucial role in flood regulation, integrated land use planning strategies can balance conservation with development needs. | Clusters 3 and 4 |
Insurance and Risk Transfer Mechanisms | Insurance and risk transfer mechanisms provide financial protection against flood-related losses and incentivize risk reduction practices. However, limited coverage and affordability issues may constrain their effectiveness, particularly in rural and low-income areas. In economically vibrant urban centers, where financial resources are relatively abundant, insurance schemes can serve as an additional layer of protection for businesses and homeowners. | Cluster 4 |
Ecosystem-Based Approaches | Ecosystem-based approaches harness the natural flood mitigation capacities of ecosystems, such as wetlands and mangroves, to reduce flood risk and enhance ecological resilience. Nevertheless, these approaches require time-intensive planning and may encounter conflicts with existing land uses. In rural and forested areas, where ecosystems provide critical ecosystem services, ecosystem-based approaches can complement traditional DRR measures and safeguard biodiversity. | Clusters 1, 2, and 3 |
Strategy | Practical Steps | Examples and Case Studies |
---|---|---|
Early Warning Systems | : Conduct a comprehensive risk assessment to identify flood-prone areas and establish a baseline of current early warning capabilities. | ] ] |
: Install advanced weather monitoring and forecasting systems, such as radar and satellite-based technologies. | ||
: Develop robust communication networks to disseminate alerts quickly to the affected population. | ||
: Train local communities and authorities on how to respond to warnings and conduct regular drills. | ||
Infrastructure Development | : Identify high-risk flood zones using topographical and hydrological data. | ] ] |
: Design flood barriers, levees, and drainage systems tailored to local conditions. Ensure designs are resilient to extreme weather events. | ||
: Conduct thorough environmental assessments to minimize negative impacts on ecosystems. | ||
: Establish long-term maintenance plans to ensure the infrastructure remains effective. | ||
Community Engagement and Preparedness | : Engage communities in mapping flood-prone areas and identifying vulnerabilities. | ] ] |
: Develop and implement educational programs on flood risks and preparedness measures. | ||
: Establish local disaster risk reduction (DRR) committees to coordinate community efforts. | ||
: Facilitate access to resources and support for community-driven projects. | ||
Land Use Planning and Zoning | : Develop detailed floodplain maps to guide land use planning. | ] ] |
: Implement zoning regulations that restrict development in high-risk areas and promote green infrastructure. | ||
: Engage stakeholders in planning processes to ensure compliance and address concerns. | ||
: Create incentives for developers to incorporate flood-resistant designs and practices. | ||
Insurance and Risk Transfer Mechanisms | : Conduct detailed assessments to determine flood risk levels and appropriate insurance premiums. | ] ] |
: Develop affordable insurance products tailored to different socioeconomic groups. | ||
: Raise awareness about the benefits of insurance and how to access it. | ||
: Encourage collaboration between governments, insurance companies, and communities to expand coverage. | ||
Ecosystem-Based Approaches | : Restore and protect natural floodplains, wetlands, and mangroves to enhance their flood mitigation capacities. | ] ] |
: Promote agricultural and forestry practices that support ecosystem health and resilience. | ||
: Incorporate ecosystem-based approaches into broader land use and development plans. | ||
: Engage local communities in ecosystem management and conservation efforts. |
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Sigit, A.; Harada, M. Land Cover and Socioeconomic Analysis for Recommended Flood Risk Reduction Strategies in Java Island, Indonesia. Sustainability 2024 , 16 , 6475. https://doi.org/10.3390/su16156475
Sigit A, Harada M. Land Cover and Socioeconomic Analysis for Recommended Flood Risk Reduction Strategies in Java Island, Indonesia. Sustainability . 2024; 16(15):6475. https://doi.org/10.3390/su16156475
Sigit, Adityawan, and Morihiro Harada. 2024. "Land Cover and Socioeconomic Analysis for Recommended Flood Risk Reduction Strategies in Java Island, Indonesia" Sustainability 16, no. 15: 6475. https://doi.org/10.3390/su16156475
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Horizontal Analysis: A horizontal analysis, or trend analysis, is a procedure in fundamental analysis in which an analyst compares ratios or line items in a company's financial statements over a ...
Horizontal analysis is an approach used to analyze financial statements by comparing specific financial information for a certain accounting period with information from other periods. Analysts use such an approach to analyze historical trends. Trends or changes are measured by comparing the current year's values against those of the base year.
Horizontal analysis is the evaluation of an organization's financial performance over many reporting periods. Side by side they do this to determine if the company's performance is improving or declining. The goal is to find significant changes in the data. Later, this data could be used to conduct a more in-depth examination of financial ...
How to Perform Horizontal Analysis. Horizontal analysis, or "time series analysis", is oriented around identifying trends and patterns in the revenue growth profile, profit margins, and/or cyclicality (or seasonality) over a predetermined period. The accounting period covered could be one-month, a quarter, or a full fiscal year.
Horizontal analysis is one of my favorite tools to dig into a company's financial performance. It's a simple process that follows four steps: Step 1: Gathering Financial Statements. Let's kick things off with the basics. The first step in horizontal analysis is grabbing the company's financial statements.
Horizontal Analysis: Definition. Horizontal analysis is an approach to analyzing financial statements. It compares historical data, which includes ratios and line items, over a series of accounting periods. ... The articles and research support materials available on this site are educational and are not intended to be investment or tax advice ...
Definition and Purpose. Horizontal analysis is a method of financial analysis where financial statements are compared across multiple periods. This approach allows analysts, investors, and management to assess relative changes in financial statement items, such as revenue, expenses, and profits. The primary purpose of horizontal analysis is to:
For example, take the income statement of a company and we can select a line item, e.g. net income. The formula for horizontal analysis will be: Historical analysis (%) = net income in year 2 - net income in the base year (year 1) / net income in a base year * 100. Note, year 2 is the comparison year. If the comparison year is year 3, then we ...
Horizontal analysis can help you identify trends in your data using your financial statements. Using Excel or Google Sheets is a great way to carry out a horizontal analysis of financial statements, especially if you use a pre-made template. If you use Layer, you can even automate parts of this process, including the control of data flows ...
Horizontal analysis, also known as trend analysis, involves the comparison of financial statement data across multiple periods to identify trends, patterns, and changes. By examining year-to-year changes in key financial metrics, you can gain insights into a company's growth, stability, and overall performance.
Horizontal Analysis Formula. First, we need to take the previous year as the base year and the last year as the comparison year. So, for example, let us say we are comparing 2015 and 2016. We will take 2015 as the base year and 2016 as the comparison year. Horizontal Analysis formula = [ (Amount in Comparison Year - Amount in the Base Year ...
Horizontal analysis, also known as trend analysis, is a financial analysis technique that compares financial data over a specific period. It provides insights into the changes and trends in financial line items such as revenue, expenses, assets, and liabilities. By examining the percentage changes in these line items, horizontal analysis helps ...
Definition: Horizontal analysis, sometimes called trend analysis, is the process of comparing line items in comparative financial statements or financial ratios across a number of years in an effort to track the history and progress of a company's performance. In other words, it's a way for analysts to compare accounts or performance metrics over time to see if the company is improving or ...
Horizontal Analysis. While analyzing financial statements, horizontal analysis is used to analyze historical data from various accounting periods, such as ratios or line items. In a horizontal analysis, comparisons can be done using either absolute comparisons or percentage comparisons. In the latter case, the statistics from each succeeding ...
Horizontal analysis and vertical analysis are two important techniques used to analyze financial statements. The key difference between them is the perspective each analysis takes: Horizontal analysis looks at trends over time, comparing financial data across multiple reporting periods. This allows you to see increases or decreases from one ...
Horizontal analysis a type of financial analysis which involves calculating changes in financial position and performance of a company across time. Together with vertical analysis, it forms the core of the common-size analysis. Unlike the vertical analysis which is more useful in comparing companies at a single point of time, horizontal analysis is useful when we want to know how two or more ...
Horizontal analysis of financial statements can be performed on any of the item in the income statement, balance sheet and statement of cash flows. For example, this analysis can be performed on revenues, cost of sales, expenses, assets, cash, equity and liabilities. It can also be performed on ratios such as earnings per share (EPS), price ...
Horizontal analysis, or trend analysis, is a method where financial statements are compared to reveal financial performance over a specific period of time. Use it to spot trends in your business.
Vertical analysis is focused on the relationships between the numbers in a single reporting period, while horizontal analysis spans multiple reporting periods. Quality of analysis. The horizontal analysis method is more likely to spot anomalies, since it is relatively easy to identify spikes and drops within a report line item over an extended ...
Horizontal analysis usually examines many reporting periods, while vertical analysis typically focuses on one reporting period. Horizontal analysis can help you compare a company's current financial status to its past status, while vertical analysis can help you compare one company's financial status to another's. Financial analysts.
Horizontal analysis is a financial analysis of the value of an income statement from a base year to a comparison year. In this analysis, the very first year is considered as the base year and the entities on the statement for the subsequent period are compared with those of the entities on the statement of the base period.
Horizon Analysis: The analysis of a security or portfolio's total returns over a period of time, referred to as the investment horizon . Horizon analysis allows an investor to assess performance ...
HORIZONTAL ANALYSIS: It is the analysis of changes in different components of the financial statements over different periods with help of a series of statements. Such an analysis makes it possible to study periodic fluctuations in different components of the financial statements. Study of trends in debt or share capital or their relationship ...
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This guide explains the focus, rigor, and relevance of qualitative research, highlighting its role in dissecting complex social phenomena and providing in-depth, human-centered insights. ... Christou P. A. (2023). Ηow to use artificial intelligence (AI) as a resource, methodological and analysis tool in qualitative research? The Qualitative ...
This study utilizes a novel approach by analyzing land use and socioeconomic factors to enhance flood risk reduction strategies on Java Island, Indonesia. Using datasets from inaRISK hazard profiles, GlobCover land cover data, and Indonesian national statistics, the research offers a methodology for mitigating flood risks in diverse geographic and socioeconomic landscapes. The study found ...