Compare amounts from a recent year to a base year and identify growth trends.
Explanation:
Horizontal analysis (also defined as pattern analysis) is a method for the study of financial reporting that indicates improvements in the sums of the respective financial statements over a span of time. This is a valuable method for determining patterns. Statements over two or more cycles shall be required over lateral study.
In a horizontal analysis, you equate transactions with one another over time periods — in eg, accounts receivable (A / R) in 2014 and A / R in 2015.
To conduct a vertical report, pick an investment account (comparable to gross revenue) and add all balance sheet funds as a ratio.
