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Horizontal and Vertical Analyses Are Analytical Tools Frequently Used to Analyze

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Essay

Horizontal and vertical analyses are analytical tools frequently used to analyze financial statements. What type of information or insights can be obtained by using these two techniques? Explain how the output of horizontal analysis and vertical analysis can be compared to industry averages and/or competitive companies.


Definitions:

Consolidation Journal Entries

Accounting entries used to adjust and combine the financial statements of a parent company and its subsidiaries for reporting purposes.

Cash Adjustment

A modification of the cash balance reported in financial statements to reflect transactions or changes not yet captured in the cash account.

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