Vertical and horizontal analysis

Reference no: EM1350623

There are times when the data can give you some inaccurate predictions. Personally, when I audit a company, I typically use 5 years worth of data. I use 5 years because that is all that our computer software is programed to hold. But, the data is only useful if it is comparable. When a company is in a transition, the numbers tend to make little to no sense. For example, when a company purchases another company and merges the operations together. You will see a big spike in the numbers and percentages. But, when you peel back the onion you can tell that the company didn't grow or expand at all. The numbers get distorted by the merge. Similarly, when a company spins off a under performing subsidiary or discontinues a line of business, the horizontal number analysis tends to unreliable.

But, what about the vertical analysis. When the horizontal analysis becomes distorted because of extraordinary events. Does the vertical analysis tend to become distorted by these same scenarios?

Reference no: EM1350623

Questions Cloud

Explain dynamic programming approach-longest weighted path : Assume we have a directed acyclic graph G = (V, E) with real-valued edge weights and two distinguished vertices s and t. Explain a dynamic programming approach for ?nding a longest weighted simple path from s to t.

Determine effective annual rate : First Choice Bank charges 9 percent APR compounded quarterly on its business loans. National Emerald Bank charges 3 percent APR compounded monthly.

Explain john''s standard of living will reduced : Explain John's standard of living will reduced even if the amount of money he earns is

Elucidate what prices he should charge in two markets : Elucidate what prices he should charge in two markets. Illustrate quantities be should sell in the two markets.

Vertical and horizontal analysis : There are times when the data can give you some inaccurate predictions. Personally, when I audit a firm, I typically use five years worth of information.

What is the total magnification : A proton moves at constant velocity in the +y direction, by a region in which there is an electric field and a magnetic field. The electric field is in the +x direction, and has magnitude 700 V/m. The magnetic field is in -z direction, and has ma..

Explain overly authoritative or accusing : Explain using it will make your message sound overly authoritative or accusing.

How a central bank does not satisfy the taylor principle : Assume a central bank does not satisfy the Taylor principle. Use a graph to analyze the impact of a supply shock.

Calculate the mass defect in u : A student of weight 665 N rides a steadily rotating Ferris wheel (the student sits upright). At the highest point, the magnitude of the normal force N on the student from seat is 566 N.

User Account

All Pages