Business Finance

Tools of Analysis

Horizontal Analysis (Index Analysis)

Dollar Change/Absolute Change =Analysis Period – Base Period

Old is base period and new is Analysis

Percentage Change = Dollar Change / base Period Amount *100

Trend Analysis

Trend Percentage = Analysis Period Amount / Base Period Amount *100

Vertical Analysis (Common Size Analysis)

Common Size Percentage = Analysis Amount /Base Amount *100

Base amount is total Assets / Liabilities

Analysis Amount