BUSS1030 Study Guide - Final Guide: Gross Margin, Current Liability, Gross Profit
Document Summary
Perform a horizontal analysis of comparative financial statements. Calculated by selecting a base year whose amounts are set equal to 100%. The amounts of each other year are expressed as a percentage of the base amount. Trend % = any year $ base year $ 2010 is the base year: perform a vertical analysis of financial statements compares each item in a financial statement to a base number set to 100%. On the income statement, each item is expressed as a percentage of net sales (sales revenue). On the balance sheet, the common size is the total on each side of the accounting equation. Common-size statements are used to compare one company to other companies, and to the industry average. Debt-dangerous: ratio analysis 5 provides a clear understanding about the profitability, efficiency, liquidity, gearing/solvency . / leverage /financial stability, investment and of a business entity. & summarises and simplifies the mass of accounting data derived from the financial statements.
