Horizontal Analysis (Step by Step Financial Ratio Analysis Tutorial) – Part 3 of 33 [Video]

In this tutorial, we’ll go over the finer details of Horizontal Analysis, including its formulas and step-by-step calculations. Following that, we will conduct a horizontal analysis of the Colgate Case Study and interpret the findings.

Download the Colgate Excel Model Ratio Analysis Template – We will use template for the analysis. You can download the ratio analysis template from this link – https://www.wallstreetmojo.com/ratio-analysis-template/

What is Horizontal Analysis?
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Horizontal analysis, also known as trend analysis, refers to the percentage change in the same line item of a financial statement in the next accounting period compared to the value of the baseline accounting period. Horizontal analysis can be performed on any of the item in the income statement, balance sheet and statement of cash flows.

Formula
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Horizontal Analysis formula = [(Amount in comparison year – Amount in the base year)/ Amount in a base year] x 100

Advantages of Performing Horizontal Analysis
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• Horizontal analysis helps evaluate trends year over year (YoY) or quarter over quarter (QoQ), for example, how much has the revenue increased over the years.
• It enables investors to view and compare actual data for consecutive years.
• Horizontal analysis is simple to interpret. It does not require any special financial skill to understand the difference between the previous year’s data and the current data.

Links to Step by Step Financial Ratios Tutorials
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• Part 1 – Ratio Analysis:
https://www.youtube.com/watch?v=yPUb6PsVvLA&list=PLazLoBfxFADN9Qq8j8hghG9nvVBXl1V0y

• Part 2 – Vertical Analysis:
https://www.youtube.com/watch?v=7CX4F2Adubs

What you need to do?
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– Step 1: Download the Colgate Excel Model Ratio Analysis Template. This template will be used for the analysis. You can download the ratio analysis template from this link – https://www.wallstreetmojo.com/ratio-analysis-template/
– Step 2: Please note that we are providing you with downloadable and preformatted Excel spreadsheets to assist you in understanding and applying the concepts. You will receive two templates: 1) Unsolved Colgate Model 2) Completed Colgate Model
– Step 3: Start by using the “Unsolved Colgate Model Template” for analysis by following the instructions step by step.
– Step 4: Good Luck! 🙂
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To know more about Horizontal Analysis in Finance, you can go to this link:
https://www.wallstreetmojo.com/horizontal-analysis/

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