The horizontal analysis is a comparison of the historical financial information for a company over

a series of reporting periods, or of the ratios derived from this financial information (Accounting Tools,

n.d.). This can be performed on revenues, cost of sales, expenses assets cash, equity and

liabilities. Additionally, it can be performed on ratios. The best quick description of a horizontal analysis

is that when you hear a person say that revenues have increased by 15% in this past quarter, that person

is using a horizontal analysis. The ease of use comes from the fact that it can be used on any item in the

company’s financial statements. There are two ways in which the comparison can be made. The first way

is the absolute comparison which compares the absolute currency amounts of the items over a period of

time (Ready Ratios, n.d.).

The second way is the percentage comparison, in which percentages are compared over a

certain period of time, and more simply, so that an easy increase or decrease rate can be

determined. (Ready Ratios, n.d.). The percentage comparison is most useful when

comparing companies that are of different size and scale. The fact that the accounting periods can be

two period or more than two periods, a month, a quarter or a year, it is the analyst’s discretion when

choosing which data they'd like to interpret and perform the analysis on.

The company I chose to perform the horizontal analysis on was Best Buy’s consolidated balance sheet for

the 2014-2015 comparative years.

Assets

Current Assets 2015 2014 Increase or (Decrease)

Amount percent

Cash and cash equivalents $ 2,432 $ 2,678 (246) (9.1)%

Short-term investments 1,456 223 1233 529.2%

Receivables, net 1,280 1,308 (28) (2.1)%

Merchandise inventories 5,174 5,376 (202) (15.4)%

Other current assets 703 900 (197) (21.9)%

Current assets held for sale 684 — (684) 100%

Total current assets 11,729 10,485 1244 11.9%

Property and Equipment

Land and buildings 611 758 (147) (1.9)%

Leasehold improvements 2,201 2,182 19 .87%

Fixtures and equipment 4,729 4,515 214 4.7%

Property under capital lease 119 120 (1) (.8)%

7,660 7,575 85 1.1%

Less accumulated depreciation 5,365 4,977 388 7.8%

Net property and equipment 2,295 2,598 (303) (11.7)%

Goodwill 425 425 - 0

Intangibles, Net 57 101 (44) (43.6)%

Other Assets 583 404 179 44.3%

Non-current assets held for sale 167 - 167 100%

Total Assets $ 15,256 $ 14,013 1243 8.9%

The end analysis shows that while many negative numbers are seen here throughout this portion of the

consolidated balance sheet, the end result is that the company’s total sets grew by 8.9%, which is an

overall gain for the company.

 References

Accounting Tools. (n.d.). Horizontal Analysis. Retrieved on February 1, 2016

from http://www.accountingtools.com/horizontal-analysis

Ready Ratios. (n.d.). Horizontal Analysis of Financial Statements. Retrieved on February 1, 2016
from http://www.readyratios.com/reference/analysis/horizontal_analysis_of_financial_stateme
nts.html