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    Financial Policy Formulation and Business Strategy

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    Examine the following in terms of how they are used in financial policy formulation and business strategy:

    1. Horizontal analysis
    2. Vertical analysis
    3. Ratio analysis
    -Profitability ratios
    -Liquidity ratios
    -Asset utilization ratio
    -Debt utilization ratio
    4. Benchmarking

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    1. Horizontal analysis - This type of analysis compares the dollar change and the percent change of each item on a financial statement for two consecutive periods. It is useful in financial policy formulation and business strategy because it identifies the various factors affecting a business, allowing management to adjust their operating strategies accordingly.

    2. Vertical analysis - This type of analysis involves the calculation of percentages of a single financial statement listed vertically, which are taken from the company's ...

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