Vertical Analysis

Vertical analysis definition: A technique of analyzing financial statements by restating each line item (e.g. sales and marketing expenses) as a percentage of another base line item (e.g. Revenue). The horizontal analysis reports are not required by Accounting Standards, and are used more as a management tool rather than a formal reporting document.

Vertical Analysis November 6th, 2016Team
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Horizontal Analysis

Horizontal analysis definition: A technique of analyzing financial data by comparing one periods financial statements to another in order to spot trends in the information. The horizontal analysis reports are not required by Accounting Standards, and are used more as a management tool rather than a formal reporting document.

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Income Statement Format

The income statement shows a business’s financial performance over a specified accounting period. It summarizes the income and expenses for the period resulting in either a net income or a net loss for the business.

The accounting period can be any length but for management account purposes is usually a month, and for legal financial reporting purposes is normally a year.

Income Statement Format September 21st, 2017Team
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Multi Step Income Statement

The multi step income statement or multiple step income statement is an income statement which arrives at a net income figure in a series of steps including, for example, gross margin, and operating income.

This is in contrast to a single step income statement which deducts the total expenses from the total revenues to arrive a net income figure after one single step.

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EBITDA

EBITDA is the earnings a business has before interest, tax, depreciation, and amortisation, and is an indicator of operational profitability of the business.

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Basic Profit and Loss

The Basic Profit and Loss shows a business’s financial performance over an accounting period. The accounting period can be any length but is usually a month or a year.

Basic Profit and Loss November 6th, 2016Team
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