![]() ![]() This is like the formal definition of a percentage change. So I have an easier way that I like to remember this. And then we divide it by the previous year's amount. Okay, the dollar amount of the change right? This year's amount minus previous years amount. It's the current year amount minus the previous year amount. Okay, so here we have the formula for percentage change. We're gonna divide it by the base period amount. And then we have to take that dollar amount of change. The dollar amount of the change because that's the first part of the percentage change. The first thing we have to do is we have to compute the dollar amount of the change. Right? So there's a two step process here. So all it is is we're gonna be computing the percentage change between the two years balances in the account. We could do it for income statement accounts, equity accounts, every type of account. ![]() We could go through our cash account and see a percentage change between one year and the previous year. So we're gonna go through different accounts. Well what it does, it's gonna evaluate percentage changes, percentage changes in account balances from one year to the next. One of the main ways that investors creditors or even the company itself analyzes the financial statements is through a horizontal analysis. ![]() So in this course we not only learn how to create the financial statements but also how to analyze them. ![]()
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