Respond to... Horizontal analysis of a financial statement is used to compare historical data such as line items or ratios throughout multiple accounting periods. This type of analysis can use either absolute comparisons or percentage comparisons. Horizontal analysis makes it easy for financial statement users to spot growth patterns and trends. This type of analysis allows individuals to successfully assess relative changes in different line items over time as well as project what they will be in the future. Looking at the balance sheet, income statement, and cash flow statement over time, can allow for individuals to observe a complete picture of operational results. This allows individuals to determine what drives a company’s performance and whether or not the company is operating profitably and efficiently. Vertical analysis observes each line item within a current period as a percentage of a base figure. Therefore, line items on an income statement can be stated as a percentage of net sales (Kimmel, Weygandt, & Kieso, 2019).In regards to a financial analysis, the horizontal analysis can be considered to be a broader view whereas the vertical analysis is a narrower view. Liquidity ratios determine a company’s ability to take care of short-term obligations. Current, quick, cash, and defensive interval ratios are all examples of liquidity ratios. In contrast, solvency ratios determine a company’s ability to take care of long-term obligations. Solvency ratios measure the adequacy of cash flow and earnings to pay for interest expenses obtained from current debts. Debt and coverage ratios are examples of solvency ratios. Profitability ratios determine a company’s ability to generate profits from its assets. Return-on-sales and return-on-investment are examples of profitability ratios. These ratios are used to analyze the financial strength of a company. Reference Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2019).  Financial accounting: Tools for business decision making (8th ed.) . Retrieved from https://www.vitalsource.com Respond to... There are two ways to breakdown financial statements to analyze a company.  The broader view is the horizontal analysis, and the narrower view is the vertical analysis.  Kimmel  defined horizontal analysis as, "A technique for evaluating a series of financial statement data over a period of time to determine the increase (decrease) that has taken place, expressed as either an amount or a percentages" . Using the horizontal analysis to note key percentages can help identify the grand scheme of a company.  In other words the horizontal analysis can help gauge a company's potential by measure its growth and/or its diminishment over time.  Ideally, taking note of a company's gross profits over the years is the key.  It can display a steady progression, which can be used to estimate growing.  However, noting a company's liabilities over time is important too For example, assessing a company's diminis.

1. Respond to...
Horizontal analysis of a financial statement is used to compare
historical data such as line items or ratios throughout multiple
accounting periods. This type of analysis can use either absolute
comparisons or percentage comparisons. Horizontal analysis
makes it easy for financial statement users to spot growth
patterns and trends. This type of analysis allows individuals to
successfully assess relative changes in different line items over
time as well as project what they will be in the future. Looking
at the balance sheet, income statement, and cash flow statement
over time, can allow for individuals to observe a complete
picture of operational results. This allows individuals to
determine what drives a company’s performance and whether or
not the company is operating profitably and efficiently. Vertical
analysis observes each line item within a current period as a
percentage of a base figure. Therefore, line items on an income
statement can be stated as a percentage of net sales (Kimmel,
Weygandt, & Kieso, 2019).In regards to a financial analysis, the
horizontal analysis can be considered to be a broader view
whereas the vertical analysis is a narrower view. Liquidity
ratios determine a company’s ability to take care of short-term
obligations. Current, quick, cash, and defensive interval ratios
are all examples of liquidity ratios. In contrast, solvency ratios
determine a company’s ability to take care of long-term
obligations. Solvency ratios measure the adequacy of cash flow
and earnings to pay for interest expenses obtained from current
debts. Debt and coverage ratios are examples of solvency ratios.
Profitability ratios determine a company’s ability to generate
profits from its assets. Return-on-sales and return-on-
investment are examples of profitability ratios. These ratios are
used to analyze the financial strength of a company.
Reference

2. Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2019).
Financial accounting: Tools for business decision making (8th
ed.)
. Retrieved from
https://www.vitalsource.com
Respond to...
There are two ways to breakdown financial statements to
analyze a company. The broader view is the horizontal
analysis, and the narrower view is the vertical analysis.
Kimmel defined horizontal analysis as, "A technique for
evaluating a series of financial statement data over a period of
time to determine the increase (decrease) that has taken place,
expressed as either an amount or a percentages" .
Using the horizontal analysis to note key percentages can help
identify the grand scheme of a company. In other words the
horizontal analysis can help gauge a company's potential by
measure its growth and/or its diminishment over time. Ideally,
taking note of a company's gross profits over the years is the
key. It can display a steady progression, which can be used to
estimate growing. However, noting a company's liabilities over
time is important too For example, assessing a company's
diminishment over time through their long-term liabilities.
In order to take a more refined look into financial statements
the vertical analysis is used. Kimmel defined vertical analysis
as, "A technique for evaluating financial statement data that
expresses each item in a financial statement as a percentage of a
base amount". Looking closer at the Changes from the base to
current amount (in percentages) will identify smaller growth

3. and diminishment of specific assets, liabilities, and
stockholders' equity--from base to current.
Kimmel defined the three types of classification for
ratio analysis of the primary financial statements:
Liquidity Ratios - Measures of the short-term ability of the
company to pay its maturing obligations and to meet unexpected
needs for cash.
Solvency Ratios - Measures of the ability of the company to
survive over a long period of time.
Profitability Ratios - Measures of the income or operating
success of a company for a given period of time .
In short the Liquidity Ratios will measure the short-term ability
of a company to pay its maturing obligations/meet any
unexpected needs for cash. The Solvency Ratios measure the
ability of a company to survive over a long-term, and the
Profitability Ratios measure income/operating success of a
company per period. Individually the ratios are not necessarily
ideal for analyzing, but all three together are ideal for
uncovering conditions unseen at the individual component basis.