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Horizontal Analysis

This document contains analyses of a company's income statement, balance sheet, liquidity and profitability ratios, payback period, and average rate of return over several years: - The horizontal analysis shows percentage changes in sales, costs, profits, and taxes from 2016 to 2019. Gross profit and net income increased each year. - The vertical analysis presents certain balance sheet items as a percentage of total assets in 2015 and 2019. Current assets made up a higher percentage of total assets in 2019 compared to 2015. - Liquidity and profitability ratios such as cash to current assets, profit margin, return on investment, and return on assets are shown from 2015 to 2018. Cash to current assets and return on

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Teofel John Alvizo Pantaleon
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340 views3 pages

Horizontal Analysis

This document contains analyses of a company's income statement, balance sheet, liquidity and profitability ratios, payback period, and average rate of return over several years: - The horizontal analysis shows percentage changes in sales, costs, profits, and taxes from 2016 to 2019. Gross profit and net income increased each year. - The vertical analysis presents certain balance sheet items as a percentage of total assets in 2015 and 2019. Current assets made up a higher percentage of total assets in 2019 compared to 2015. - Liquidity and profitability ratios such as cash to current assets, profit margin, return on investment, and return on assets are shown from 2015 to 2018. Cash to current assets and return on

Uploaded by

Teofel John Alvizo Pantaleon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Horizontal Analysis: Income Statement

Change (%) Change (%) Change (%) Change (%)


2016 2017 2018 2019
Sales
Cost of Sales
Gross Profit
Total Expenses
Net Income
Income Tax
Net Income After Tax

The horizontal analysis

Increase during

Vertical Analysis: Balance Sheet

% Base on Total Assets % Base on Total Assets


______2015_______ ______ 2019_______

Current Assets
Non-Current Assets
TOTAL ASSETS
LIABILITIES
PARTNERS’ EQUITY
TOTAL LIABILITIES AND
PARTNER’S EQUITY

The current assets during

Ratio Analysis: Liquidity and Probability Ratios

Formula 2015 2016 2017 2018


Cash to Current Assets Cash divided
By Current Assets

Profit Margin on Sales Net Income


Before Tax
Divided by Net Sales

Return on Investment Net Income


divided by
Average Investment (Equity)
Return on Average Net Income
Assets divided by
Average Total Assets

Using ratio analysis, the

Increasing year by year, though this can be bitterly improved in actual through marketing research and
studies.
Advertisement could also be of help when realizing this business. The ROI, on the other hand, proves to
be good.

Payback Period

Cost of Investment
Cash Provided from Operation (first year) _( )_
Excess of Cost over Cash provided from First Year of Operation
Cash Provided from Operation (second year) _( )_
Excess of Unrecovered Cost over Cash provided in the second year
Cash Provided from Operation (third year) _( )_
Excess of Unrecovered Cost over Cash provided in the third year
Cash Provided from Operation (fourth year)

Payback Period

The payback period is necessary when considering whether to invest or not. This determines the
duration when the investment is recovered. Generally, it is more acceptable for investment projects to
have shorter payback. However, this also considers the materiality of the investment; too heavy
investment might have longer payback period than those which are not really that huge. In this case, the
payback period will take

In its long run, the implication of the payback period is definitely an acceptable business prospect. This
also means that the
Average Rate of Return

Net Income Equity (Beginning Capital Balances)

Year 1

Year 2

Year 3

Year 4

Year 5

Total

Average Net Income


and Equity in 5 years

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