The presentation of the changes from year to year for each line item can be analyzed to see where positive progress is occurring over time, such as increases in revenue and profit and decreases in cost. The amount and percentage differences for each line are listed in the final two columns, respectively. The first two columns show income statement amounts for two consecutive years. Jonick Companyįor the Years Ended Decemand 2018 DescriptionĪ horizontal analysis of Jonick’s 20 income statements appears above. Conversely, less favorable readings may be isolated using this approach and investigated further. The earlier year is typically used as the base year for calculating increases or decreases in amounts. A horizontal analysis involves noting the increases and decreases both in the amount and in the percentage of each line item. Comparative financial statements place two years (or more) of the same statement side by side. Important information can result from looking at changes in the same financial statement over time, both in terms of dollar amounts and percentage differences.
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