horizontal analysis focuses on the "trends" of various accounts. You will notice that most annual reports present financial data for five years. If you used horizontal or trend analysis for 5 years of data, it would be easy to notice illogical trends or red flags that would require extra attention. Remember that is important to look at both the dollar change and percentage change. One without the other could be meaningless. It may also be useful to compare a trend analysis to industry standards. Vertical analysis uses the largest item on the financial statement and compares all other items to it. For example, on the balance sheet, total assets equals 100?