# Horizontal analysis of the balance

The importance of accounting analysis of certain monetary transactions mentioned a lot.However, in order to identify how a particular balance sheet item makes a profit, we need not only vertical but also horizontal analysis.So you can maximize the schematic and see the weaknesses of the enterprise and take appropriate action.

What is the horizontal analysis of balance?This balance calculation, which allows us to understand how stable performance of the enterprise in a given period of time, and more often over time.The basis of calculation takes some period of time - usually from three months to a year, as well as all the information on the main object of the company.Horizontal analysis of the balance sheet allows us to understand what is the source of profit, and that - no.

In order to make this kind of analysis possible, you first need to collect all the necessary information.Let's say you have decided to spend the horizontal balance sheet analysis.An example of this: look at the work of one compa

ny in 1999, in 2000 and 1998.To start collecting data on the incomes of each of the articles in these years.Articles should be as follows: the two main - and asset holdings.Active in turn is divided into non-current assets, current assets and fixed assets.Reserves also need to be divided into short-term investments, zodolzhnost - Receivables, as a rule, in the column "Other current assets".Then you need to create a table in which each article will be in the left column.At the end of the table Doris another column - balance.The next column - data for 1998.Each count record data on each of the articles in monetary and percentage terms.That is all the numbers you need to not only find, but also to translate into percentages.100% take the highest figure for the year.Once done this, go to the data for 1999, then - 2000. More - more: summarize resulting in each column in the balance.Now, the situation can be seen quite clearly: 98 in the enterprise was a crisis.Severe losses brought items such as other assets and receivables amounted to as much as one hundred percent.In 1999 oranizatsii failed to correct the situation through a reduction of other assets and change in policy action.Noticed increase the balance in 2000.You know how this works?Due to the fact that you will make horizontal balance sheet analysis, you can clearly see what needs to change in the enterprise in order to increase profits.

This method of diagnosis is used by all successful businesses.Coupled with the vertical analysis of the procedure has no equal - all strong and weak points are seen as the palm.Horizontal analysis of balance is a lifesaver for those who were previously difficult to detect errors in the conduct of its affairs.

way to naiboshey clarity, you can create a graph or chart of balance - it is accepted at the meetings to show the company's management.

Some people have difficulty reading have the balance sheet because it is not always clear what is meant by an accountant of a particular article.Briefly, we go over the main concepts that make horizontal balance sheet analysis is taking place.Assets accounted for the overall performance of intangible assets - (land, premises belonging to the ownership of the company), fixed assets - is the cost of the equipment and its maintenance and repair, unfinished investment - investing money in the company for the construction, repair or improvement of production.Inventories - raw materials, products - all that is in stock, but has not yet been entered in the trade accounts receivable - calculation with other enterprises.Cash - the finances, which are now available from the company.Here, in principle, and all the difficulties.Be literate in business and do not be lazy to make a horizontal analysis of balance and see all your mistakes.