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What does horizontal and vertical analysis tell us about a company?
Wiki User
∙ 14y ago
Vertical analysis, or common-sized statements , each amount on a financial statement as a percentage of another item. It can also to analysis income statement, balance sheet and cash flow statement.
Eg. Income statement : turnover is expressed as 100% and every item in the income statement is expressed as a percentage of turnover (sales).
Wiki User
∙ 14y ago
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How do you write a letter about stealing from the company?
be polite, but still with force, tell them how you feel about it
What are the limitations of ratios and how do you over-come those limitations?
Limitations of Financial Ratios There are some important limitations of financial ratios that analysts should be conscious of: - Many large firms operate different divisions in different industries. For these companies it is difficult to find a meaningful set of industry-average ratios. - Inflation may have badly distorted a company's balance sheet. In this case, profits will also be affected. Thus a ratio analysis of one company over time or a comparative analysis of companies of different ages must be interpreted with judgment. - Seasonal factors can also distort ratio analysis. Understanding seasonal factors that affect a business can reduce the chance of misinterpretation. For example, a retailer's inventory may be high in the summer in preparation for the back-to-school season. As a result, the company's accounts payable will be high and its ROA low. - Different accounting practices can distort comparisons even within the same company (leasing versus buying equipment, LIFO versus FIFO, etc.). - It is difficult to generalize about whether a ratio is good or not. A high cash ratio in a historically classified growth company may be interpreted as a good sign, but could also be seen as a sign that the company is no longer a growth company and should command lower valuations. - A company may have some good and some bad ratios, making it difficult to tell if it's a good or weak company. In general, ratio analysis conducted in a mechanical, unthinking manner is dangerous. On the other hand, if used intelligently, ratio analysis can provide insightful information. Financial ratios are not very useful on a stand-alone basis; they must be benchmarked against something. Analysts compare ratios against the following: 1.The Industry norm - This is the most common type of comparison. Analysts will typically look for companies within the same industry and develop an industry average, which they will compare to the company they are evaluating. Ratios per industry are also provided by Bloomberg and the S&P. These are good sources of general industry information. Unfortunately, there are several companies included in an index that can distort certain ratios. If we look at the food and beverage ratio index, it will include companies that make prepared foods and some that are distributors. The ratios in this case would be distorted because one is a capital-intensive business and the other is not. As a result, it is better to use a cross-sectional analysis, i.e. individually select the companies that best fit the company being analyzed. 2.Aggregate economy - It is sometimes important to analyze a company's ratio over a full economic cycle. This will help the analyst understand and estimate a company's performance in changing economic conditions, such as a recession. 3.The company's past performance - This is a very common analysis. It is similar to a time-series analysis, which looks mostly for trends in ratios.
How can you verify a company has filed for bankruptcy?
http://www.companieshouse.gov.UK/ click on search company info search there name then click on order info on this company but you don't have to pay and it will show you a list and tell you if it has filed for bankruptcy. Adam www.aeautomotive.co.UK
What to do if credit card company refunded extra money?
You are legally required to tell them about it and give it back to them if they request it (which they will).
What does the accounting equation tell us?
How the assets of a company are financed i.e., the amounts of liabilities and capital used for assets.
Vertical signs give direction or information and horizontal signs give instructions or tell you the law?
vertical signs generally give instructions or tell you the law. horizontal signs give directions or information
A spirit level tells if things are horizontal contain alcohol or a re underground?
They tell you if things are horizontal or vertical.
Does a spirit level tell us if things are horizontal?
If the bubble is exactly centered the level is horizontal (or vertical if it is one of those)
What do spirit levels tell?
It tells you if the surface it's placed against is vertical or horizontal
How do you tell where the input and output is on a function graph?
Normally the input is on the horizontal axis and the output on the vertical axis.
How can you tell if a slope is zero or undefined?
A slope is 0 if it is a straight horizontal line. A slope is undefined if it is a straight vertical line.
Which way is vertical up or down?
Vertical means up and down. A horizontal line goes from the left to the right (or from the right to the left) like this: ----------------------------- A horizontal line goes from a position that is low to a position that is high (or from a position that is high to a position that is low) like this: | | | | | | | | But the word "vertical" does not tell you which direction the line is drawn, just the it is a line.
What does the gradient of a graph tell you?
It tells you the rate of change of the variable mapped along the vertical axis relative to the change in the variable mapped along the horizontal axis.
What does a spirit level tell?
A spirit level tells us the level of the surface we are working on ie. building a wall etc, is true, i.e. vertical or horizontal.
What does a Spirit Level tell us?
A spirit level tells us the level of the surface we are working on ie. building a wall etc, is true, i.e. vertical or horizontal.
How do you tell rows apart from columns?
ROWS: Horizontal (left-right); numbered. COLUMNS: Vertical (up-down); lettered. EXAMPLE: B3 = Column B; Row 3
How do you help children understand the difference between tall and long?
Just tell them to think about the terms as different directions since 1 is vertical & the other horizontal. Also tall implies distance from the ground.
