What you will learn to do: Compare financial statements: intercompany and intracompany
Intercompany means between companies, and may also include comparisons to industry averages.
Intracompany means within a single company, and can be either a horizontal analysis or vertical or often a combination of both.
- Horizontal analysis involves laying out periods of information side by side in order to analyze trends.
- Vertical analysis looks at line items in a single period as a percentage of some base amount and is sometimes referred to as common-size analysis.
You could take common-size financial statements and lay them out side by side in order to analyze the trends, such as changes in gross profit percentage.
Candela Citations
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- Introduction to Comparative Analysis of Financial Statements. Authored by: Joseph Cooke. Provided by: Lumen Learning. License: CC BY: Attribution
CC licensed content, Shared previously
- Principles of Financial Accounting. Authored by: Christine Jonick. Located at: https://web.ung.edu/media/university-press/Principles-of-Financial-Accounting.pdf?t=1601063299615. License: CC BY-SA: Attribution-ShareAlike
- Modification of Image: Planning Finance. Authored by: mohamed Hassan. Located at: https://pixabay.com/illustrations/planning-finance-business-4077086/. License: CC0: No Rights Reserved. License Terms: https://pixabay.com/service/terms/#license