Question

Perform a horizontal analysis providing both the amount and percentage change. (Round Percentage answers to 1 decimal place. Decreases should be indicated by a minus sign.)

	Year
	2018		2017
Cash	$	278,860	$	730,000
Accounts receivable		324,090		130,000
Inventory		715,680		630,000
Long-term assets		3,280,330		2,230,000
Total assets	$	4,598,960	$	3,720,000

Answer 1

Under horizontal analysis, data of the corresponding previous year is compared with the data of the current year and a difference is calculated and a percentage change is calculated in comparison to base year

For example, horizontal analysis of cash in the current problem will be as follows

Change in amount

Cash of 2018 – Cash of 2017

= $278,860 - $730,000

= $ - 451,140

Percentage change from previous year

= Change in amount / Cash of 2017

= $ - 451,140 / $730,000

= -0.618 or – 61.8%

Similarly, other calculations are shown in the following table

Particulars	2018	2017	Change in amount	Percentage change
Cash	278,860	730,000	(451,140.00)	-61.80%
Accounts receivable	324,090	130,000	194,090.00	149.30%
Inventory	715,680	630,000	85,680.00	13.60%
Long-term assets	3,280,330	2,230,000	1,050,330.00	47.10%
Total assets	4,598,960	3,720,000	878,960.00	23.63%