There are several types of financial analysis: 1. Horizontal analysis involves analyzing financial data over time, such as computing year-to-year dollar and percentage changes within a set of financial statements Horizontal Analysis - Income Statement Jan 1 - Dec 31, 2018 Sales Cost of Goods Sold Gross Profit 2017 $ 50,000 $ 39,500 10,500 2018 $Change 55,000 $ 5.000 42500 3,000 12,500 % Change 10% 84 1974 2,000 7% -17% Expenses: Selling, General & Administrative Expenses Depreciation Total Expenses Net Income 6,800 1,800 8.600 1,900 $ 7,300 1,500 8,800 13,700 $ 500 (300) 200 1,800 2% 95%. 2. Vertical analysis focuses on the relationships among financial statement accounts at a given point in time. A common-size financial statement is a vertical analysis in which each financial statement account is expressed as a percentage. Income statement items are usually expressed as a percentage of sales. Balance sheet items are usually expressed as a percentage of total assets. Common-Size Income Statement Jan 1 - Dec 31, 2018 % of Sales Sales Cost of Goods Sold Gross Profit $ 50,000 39.500 10.500 100.0% 79.0% 21.04 Expenses: Selling, General & Administrative Expenses Depreciation Total Expenses Net Income 6.800 1800 8.600 1.900 13.6%. 3.6% 17 2% 3.8% 5 Commo-Sire Balmce Sheet FY onded Deo 31. 201 x of Total Assets * of Total Assets Assets 2010 Liabilities $ Cash Acoounts Recevable Inventories Net Property Plant & Equipment (PPE) 15,000 5,800 32,000 150.000 7.4% 2.9% 15.8 740% Accounts Payable Accrued Expenses Long-term Debt Total Liabilities Stockholders' Equity Total Liabilities Stockholders' Equity 850 1800 50.000 60,350 12.450 490 0.78 28.69 23. 7020 Total Assets $ 202300 212.800 3. Ratio analysis uses data from the Income Statement and/or the Balance Sheet to spot certain relationships. These relationships give insight into a company's ability to o Pay its obligations and debts as they come due (Liquidity ratios) Efficiently use its assets to generate profits (Activity ratios) Mange its debt and capital structure (Debt or Leverage ratios) . Generate profits for its shareholders or owners (Profitability ratios) For your Main Post, respond to these points and questions. Considering these three types of financial statement analysis above identify the type that you feel is the most useful to managers How does this type of analysis apply to your own work or perhaps a personal husiness? Be sure to fully explain how this method applies