Horizontal Analysis
Definition
Comparing financial statement figures across multiple periods to spot trends and growth rates. It reads the accounts left to right, period over period.
Related Terms in Financial Analysis
Vertical Analysis
Expressing each line of a financial statement as a percentage of a base figure — revenue for the income statement, total assets for the balance sheet — to compare structure across periods or businesses of different sizes.
Common-Size Financial Statements
Statements where every line is shown as a percentage of a base amount, making it easy to compare companies of very different sizes or to track how a cost structure shifts over time.
Net Present Value (NPV)
The value today of a project's expected future cash flows, discounted at a required rate of return, less the initial investment. A positive NPV means the project is expected to add value.
Internal Rate of Return (IRR)
The discount rate at which a project's net present value is zero — effectively its expected percentage return. A project is generally attractive when its IRR exceeds the required rate of return.
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