How to use Horizontal analysis to analyze income statement, identify trends and spot issues.
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How to use Horizontal analysis to analyze income statement, identify trends, spot issues and make recommendations from analysis.

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00:00 Horizontal Analysis
00:29 What is Horizontal Analysis
02:10 Calculating year over year variances
02:58 Calculating % variances
05:25 Analyzing Revenue
06:18 Analyzing Cost of Sales
09:40 Analyzing Operating expenses
11:56 Analyzing interest expense and other income / expense
13:50 Analyzing tax expense
14:38 Summarizing horizontal analysis of income statement

In this video, I explain what is horizontal analysis and how to perform the analysis to compare two or more periods, in Microsoft Excel. The example income statement I use is a real life example of the income statement or profit and loss statement of Coca Cola company. So, these are real numbers we are looking at. We will look at how to calculate the changes in amounts and how the percentage change is calculated when performing horizontal analysis. Then we look at each income statement line item and one by one try to understand the performance, and identify the positives and negatives, ask questions to help understand the performance better.

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If you would like to learn in detail, how to calculate income statement variances and the impact they have on sales $, profit $ and profit margin % and ebitda %, and how to explain performance vs budget and prior periods, click on the link for a detailed video course (at a special price). You will also learn how to analyse and present the results of the variances to management and will be able to download solved variance calculation Excel templates. https://ebitda.thinkific.com/courses/learn

I have not looked at any back up information before performing the analysis. The idea is to share how to view and analyse income statement to understand performance and ask relevant questions to identify more details.

Follow me as I calculate variances in amounts and percentages, and explain what they represent. Then I ask questions and make recommendations based on the analysis performed. I have seen this analysis done incorrectly in the past, so I try to share my thoughts from my practical experience of a horizontal analysis as it would be done in a real life workplace.

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Hope you find the information in the video helpful. If you like to watch more videos in accounting, financial analysis and controller ship, videos that help you directly in doing your job, subscribe to my channel. If you liked the video, I would love if you could LIKE it and leave a comment. If you have any questions or feedback, again leave a comment. Lets stay connected at #horizontalanalysis #income statement #learnaccountingfinance