• Horizontal analysis is used in the analysis of the company’s financial statements for several periods.

  • Usually displayed as a percentage increase over the same item in the base year.
  • Horizontal analysis allows users of financial statements to easily identify growth trends and patterns.
  • Horizontal analysis shows the growth and financial position of the company compared to competitors.
  • Horizontal analysis can be manipulated to make the current period look better if specific historical periods of poor performance are selected for comparison.