(1) Horizontal Analysis :
The percentage analysis of increases and decreases in corresponding items in comparative financial statements is called horizontal analysis. Horizontal analysis involves the computation of amount changes and percentage changes from the previous to the current year. The amount of each item on the most recent statement is compared with the corresponding item on one more earlier statements.
(2) Vertical Analysis :
Vertical Analysis uses percentages to show the relationship of the different parts to the total in a single statement. Vertical analysis sets a total figure in the statement equal to 100 per cent and computes the percentage of each component of that figure.
(3) Trend Analysis :
Using the previous year’s data of a business enterprise, trend analysis can be done to observe percentage changes over time in selected data. In trend analysis, percentage changes are calculated for several successive years instead of between two years.
(4) Ratio Analysis:
Ratio analysis is an important means of expressing the relationship between two numbers. A ratio can be computed from any pair of numbers. To be useful, a ratio must represent a meaningful relationship, but use of ratios cannot take the place of studying the underlying data.
