I need some additional information on trends of analysis. Internal and external users would benefit equally from using vertical, horizontal, or ratio analysis. However, what if users combined two types of analysis? Is it possible to combine this vertical analysis with horizontal analysis to identify trends? If so, then how so? What would management be looking for when trending the current ratio in horizontal analysis?
Each type of analysis gives us something different, and the information can then be used together, for additional analyses and evaluation. If users combined two or more types of analyses, it would increase the amount of information available to those users, for better informed financial decision making purposes. The current ratio is the main ratio that is used by both internal and external users, to determine liquidity. Investors (external users) want to know how liquid the company is, which would tell those investors how well the company ...
This solution discusses analysis trends, multiple types of analyses, and trend identification. A comprehensive discussion is provided.