Financial Analysis:A financial Statement implies the formal and final summary of the financial affairs of the concern, indicating the performance, profitability, position, etc. The process of thoroughly analyzing the information given in the financial statement, so as to estimate the present and past financial position, operational efficiency of the concern, is called financial statement analysis or financial analysis. Financial Analysis can be of two types, i. e. Horizontal Analysis and Vertical AnalysisBASIS FOR COMPARISONHORIZONTAL ANALYSISVERTICAL ANALYSISMeaningHorizontal analysis is the comparative evaluation of the financial statement for two or more periods, to calculate the absolute and relative variances for every line of item. Vertical analysis is a proportional evaluation of the financial statement wherein each item on the statement is expressed as a percentage of the total, in the respective section. UseIt represents the growth or decline of an item. It helps in forecasting and determining the relative proportion of an item to the common item in the financial statement. Aims atAscertaining the trend and changes in an item over time. It aims at ascertaining the proportion of items to the common item of the single accounting year. ExpressesAn item from the past financial statement is restated to a percentage of the amount from the base year. Each item of the financial statement is denoted as a percentage of another item. ComparisonHelpful in intra-firm comparisonHelpful in both intra-firm comparison and inter-firm comparisonTherefore, the comparison of net profit with the sales of the same year is termed vertical comparison. In accounting literacy, there are no Elliptical or Multidimensional comparisons.