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Horizontal Analysis

[hawr-uh-ZON-tl uh-NAL-uh-sis]

What is the definition of Horizontal Analysis?
A financial analysis technique that compares line items in financial statements over a series of periods, calculating both the dollar amount and percentage changes from one period to the next.
Using Horizontal Analysis in an Example

In horizontal analysis, if a company's revenue was $100,000 in year one and increased to $120,000 in year two, the analysis would show a $20,000 increase in revenue and a 20% growth rate from the previous year.

Using Horizontal Analysis in a sentence

During the financial review meeting, the CFO used horizontal analysis to demonstrate the company's steady growth in sales over the past three years.

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