Introduction to Comparative Analysis of Financial Statements

What you will learn to do: Compare financial statements: intercompany and intracompany

A cartoon depiction of a businessman examining a pie chart and bar graph.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.