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    Comparative Analysis for Solver Company

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    Using the following selected items from the comparative balance sheet of Solver Company, illustrate horizontal and vertical analysis.

    December 31, 2006 December 31, 2005
    Accounts Receivable $ 870,000 $ 600,000
    Inventory 950,000 750,000
    Total Assets 4,100,000 3,000,000

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    Solution Preview

    Horizontal analysis is conducted by setting consecutive balance sheet, income statement or statement of cash flow side-by-side and reviewing changes in individual categories on a year-to-year or multiyear basis. The most important item revealed by comparative financial statement analysis is trend.
    A comparison of statements over several years reveals direction, speed and extent of a trend(s). The horizontal financial statements analysis is done by restating amount of each item or group of ...

    Solution Summary

    An illustration of horizontal and vertical analysis for Solver Company