Horizontal analysis is useful in the analysis process due to
following reasons:-
- It is helpful in trend analysis by comparing financial data
provided in financial statements
- It compares various ratios of two businesses.
- It measures financial and operational performance of an
organization.
- It increases the efficiency of planning process of any
organization.
- It is helpful to check whether company's liquidity is good
enough or not.
- It also checks company's ability to repay its debts.
- It promotes better decision making by management of an
organization.
- It increase operational efficiency level by analysing sales,
production and inventory available in the business.