Horizontal and vertical balance of a wholesale textile enterprise. Horizontal and vertical analysis of the balance sheet. Brief information about the balance sheet

The most common methods for assessing the financial situation are vertical and horizontal analysis of the balance sheet. These methods allow you to increase the company's income, reduce risks and prevent possible negative consequences from incorrect accounting and reporting.

What is a balance sheet?

The balance sheet is the main report of the organization, revealing the essence of its economic condition.

As a general rule, the report is submitted no later than March 31 of the year following the reporting year. If the due date falls on a non-working holiday or weekend, you must report on the first business day following it.

The document is sent electronically to the IFTS at the place of registration. From January 1, 2020, it is not necessary to report to the territorial division of statistics (Federal Law No. 444-FZ of November 28, 2018).

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The Ministry of Finance approved the balance sheet form by order No. 66n dated July 2, 2010. The balance sheet consists of two parts:

Vertical balance analysis

Vertical balance sheet analysis is also called structural. The main feature is that when it is carried out, the final data are shown relative to other values ​​included in the balance sheet as separate items. This analysis makes it possible to judge what share each element of the economic life of the enterprise occupies in its overall structure.

Each indicator of the balance sheet when conducting a vertical analysis is calculated as a percentage in relation to the same indicator in the previous period.

Such an analysis reveals the following changes that have occurred in the financial condition of the enterprise:

• in what direction the debt has changed in relation to creditors;
• what happened to fixed assets and their depreciation.

The convenience of vertical analysis lies in the fact that analytics as a percentage clearly demonstrates the deviation of results compared to a particular period.

Algorithm for compiling the vertical balance of the organization:

Step 1. Designate the sum of the asset and liability as 100%.

Step 3. Calculate the dynamics of changes.

Vertical balance sheet analysis: example and conclusions

Here is a simple example of vertical balance sheet analysis. Let's compare 2018 and 2019:

Name of indicator			% 01.01.2018	% 01.01.2019
I. CURRENT CAPITALS
Inventory
II. FIXED ASSETS
Buildings and constructions
Depreciation
Equity
Short term debt
Long-term debt

Conclusions: as of January 1, 2018, fixed assets accounted for 36% of the asset. As of January 1, 2019, the share of fixed assets in the total structure decreased. Consequently, either alienation or write-off of OS objects occurred. Along with the alienation of fixed assets, there was also a decrease in the share of depreciation in the structure, since there were fewer objects.

The increased accounts receivable shows that the fixed assets were sold, but the buyers did not immediately pay off.

The reduction in the share of equity capital is associated with the losses that the company has incurred in the current period.

Horizontal balance sheet analysis

Horizontal balance sheet analysis is also called "trend analysis". Horizontal and vertical analysis of the balance sheet differ in that the first allows you to track changes in physical terms.

Horizontal analysis requires equal time intervals, such as a calendar year or 12 months. This type of analysis allows you to understand how the articles and indicators of the company's economic activity change over time.

Horizontal balance analysis algorithm:

Step 1. To calculate changes in physical terms: subtract the indicator of the balance sheet item of the previous year from the indicator of the current period item.

Step 2. To calculate the deviation in percentage: the value of the line from the column "Change, rub" is divided by the indicator from the column "Status as of 01/01/2018, rub." and multiply by 100%.

Horizontal balance sheet analysis: an example and conclusions

Here is a simple example of a horizontal balance sheet analysis. Let's compare 2018 and 2019:

Name of indicator	Status as of 01/01/2018, rub.	Status as of 01/01/2019, rub.	Change, rub.	Deviation,%
I. CURRENT CAPITALS
Inventory
Short-term accounts receivable
Cash and short-term financial investments
II. FIXED ASSETS
Buildings and constructions
Depreciation
Equity
Short term debt
Long-term debt

Usually 2-3 periods are taken for analysis. This allows you to track changes in indicators of financial and economic activity over time.

Conclusions: in 2019, almost all indicators indicate a decrease in the financial activity of the enterprise compared to the same period in 2018. The largest decrease in inventories - their value decreased by 33.86%.

At the same time, there is an increase in accounts receivable by 23.46%. Increases, but in a negative sense, long-term debt. This trend may lead to the fact that counterparties do not repay their debts. Some of them may be liquidated or declared bankrupt in accordance with a court decision.

The decrease in the share of equity capital also indicates that the financial and economic condition of the company is in an unstable position.

It can be concluded that the company needs to revise its development strategy in order to increase its financial stability.

There are many methods for analyzing the balance sheet. The choice of a specific one depends on the task, as well as the available information. The most commonly used methods are vertical and horizontal analysis. They are necessary for the analysis of financial statements, increasing income. The methods are relevant for investors, banking institutions, creditors.

Vertical balance analysis

Vertical analysis is required to find the structure of the final values ​​of financial indicators. It displays the following options:

• Availability of current and permanent assets, their volume.
• Sources of financing.
• Balance sheet parameters that change rapidly.
• Changes in the overall structure of the balance sheet.
• Share of reserves.
• The share of receivables in the total structure of assets.
• share of own funds.
• Placement of borrowed funds.
• Debts to budget entities and credit organizations.

Responsibility for conducting vertical analysis rests with the employees of the economic department.

Holding

Consider the vertical analysis algorithm:

1. The total assets of the company is taken as 100%.
2. Each parameter specified in the reporting is determined as a percentage of 100%.

When conducting an analysis, you need to follow a number of rules:

• Vertical analysis is a tool for determining the solvency of an organization. For this reason, special attention should be paid to receivables, financial contributions, available funds and their equivalents.
• When comparing indicators in percentage, it is necessary to identify inconsistencies in turnover.

Consider the conclusions that can be drawn from the results of vertical analysis:

• Reflection of existing changes in relation to the totality of property.
• Growth of non-current assets in percent.
• Fixing the share of the organization's personal capital at a certain level.
• Presence or absence of losses.
• The presence or absence of long-term loans and obligations to creditors.

ATTENTION! If, as a result of vertical analysis, a lack of free funds was discovered, this may adversely affect the level of solvency.

Example

Let's consider an example of calculation on the line "Cash and its equivalent". This figure is 25,000 rubles. The balance currency for the selected period is 550,000 rubles. The calculation is carried out according to the following scheme: 25,000/550,000*100% = 4.5%.

The resulting value indicates the percentage of cash from the balance. It can be analyzed. In this example, the company has little free cash. This means that its solvency is low.

Horizontal cash analysis

The main function of horizontal analysis is to compare parameters for the current period, as well as the previous period. As a result, it is possible to determine the dynamics, based on which conclusions can be drawn.

Horizontal analysis is a comparative analysis of financial performance for the periods of interest. When calculating, you need to take the values ​​​​by the line, and also track its changes over several periods.

These periods can be completely different intervals. However, as a rule, the analysis is carried out by quarters or years. The number of periods that are analyzed can be different. Everything depends on the tasks. If a qualitative analysis is carried out, 3 periods are taken into account in the calculation. As a rule, this technique is carried out in order to analyze the balance sheet, profit and loss statement, changes in capital. Horizontal analysis can be carried out according to two approaches:

• Change in absolute values ​​(for example, in rubles).
• Change in relative values ​​(for example, in percent).

The approaches complement each other. The most understandable example of horizontal analysis is the determination of the change in values ​​in relation to the previous period. For example, the company's revenue for the quarter increased by 25%.

ATTENTION! Horizontal and vertical analyzes are essentially opposite. The horizontal method allows you to track changes over different periods. The vertical method involves tracking changes within the boundaries of one period.

Analysis features

When performing a horizontal cash analysis, you need to follow a number of rules:

• The main parameters that you should pay attention to are cash deposits, cash, as well as receivables. These options display available free funds.
• If you want to form a complete picture of changes, you need to analyze the balance sheet of the last 2-3 years.

The work is carried out on the basis of the company's documentation.

Structure

Consider the indicators that are analyzed using the horizontal method:

• and working capital.
• Accounts receivable.
• Cash and cash equivalents.
• Equity.
• Borrowed capital.

Additional options can be used if required.

How is horizontal analysis performed?

The employee needs to determine how the company's own funds are formed. To do this, you need to analyze the liability of the balance sheet. When analyzing the movement of funds, you need to focus on a number of items, such as:

• Debts to creditors.
• Borrowed funds.
• The size of the authorized capital.
• Income to be received in the following periods.
• Undestributed profits.

As a rule, free funds are formed at the expense of receipts from the company's clients. A decrease in value indicates either a decrease in advance payment, or a decrease in demand.

ATTENTION! Horizontal analysis provides only approximate indicators. If alarming values ​​are found as a result, it will be necessary to additionally calculate various coefficients.

Example

The following values ​​are analyzed:

In a full-fledged analysis, a much larger list of parameters is used. Comparing the data of the two columns allows you to trace the existing changes. Based on them, a conclusion is made about the financial condition of the company. To get a complete picture, you need to study all the indicators, as well as determine the reasons for the changes.

Analysis of the obtained values

The balance sheet reflects the state of the company. A “good” balance meets a number of requirements:

• The balance sheet currency at the end of the period under review increases relative to the beginning of the period.
• The growth rate of the currency exceeds the growth rate of inflation, but is less than the growth rate of revenue.
• The growth rate of current assets is higher relative to the growth rates of non-current assets and short-term debts.
• The volume of long-term borrowed funds is greater than the values ​​for non-current assets.
• Equity capital is not less than 50%.
• All parameters (rate, volume) of receivables and payables are approximately the same.
• There are no uncovered losses or they are extremely small.

IMPORTANT! When analyzing, you need to pay attention to new trends in accounting methods, changes in accounting policies.

Hello, Vasily Zhdanov is in touch, in the article we will consider a horizontal and vertical analysis of the balance sheet of an enterprise. Maintaining financial statements is the most important aspect of the activities of a serious commercial organization. But the ability to analyze the balance sheet is also important, because the data recorded in it can tell the expert about the past and current activities of the company, as well as predict the development of the enterprise in the future. Depending on how much information the analyst needs and what specific goals he pursues, one of the many existing balance analysis methods is selected. But the most popular are horizontal and vertical balance sheet analysis, because. both methods allow:

• reduce the risks of creditors when investing in companies;
• develop methods for maintaining the stability of production;
• increase the company's income;
• Conduct a sound analysis of financial statements.

Important! Horizontal and vertical balance sheet analysis can be applied simultaneously, as they complement each other and help to conduct a deeper study of accounting data, which allows you to see the growth rate of the company and the dynamics of its development.

Brief information about the balance sheet

The balance sheet is a key type of reporting, thanks to which the company's management staff has the opportunity to see the dynamics of the company's development in specific numbers, the presence of short-term and long-term debts, the origin of funds, as well as the amount of fixed / working capital.

Often, the balance sheet is called a financial entity, due to the fact that the information contained in the reporting clearly demonstrates to the company's managers and analysts the risks of ruin and development prospects, as well as the growth (decline) rate.

The results of the balance sheet are 2 parts, equal to each other (if the balance is drawn up correctly):

1. ASSETS(money, material assets, machinery, equipment, buildings and structures, stocks, debts of counterparties and consumers, etc.) - everything that a company owns and disposes of in order to carry out commercial activities and make a profit.
2. LIABILITIES(short-term liabilities to counterparties and customers, borrowed funds, retained earnings, own (share) capital) - information about the sources of the company's assets.

To help the management of companies in finding weaknesses in the company's activities and options for correcting errors, horizontal and vertical analysis of the business can.

Horizontal balance sheet analysis. Example with conclusions

The method of analysis, which will be discussed, is called horizontal for the reason that information on each item of the balance sheet for several periods is arranged in a line horizontally. The more periods of activity that compare data, the more columns in the analysis table.

Below is a list of the main information that you need to know about the horizontal analysis of financial statements:

1. This method is used in cases where it is required to study the temporal dynamics of the balance sheet results.
2. Comparison is subject not only to the values ​​of absolute indicators (in rubles), but also relative (in%):

Absolute deviations
Relative deviations
Rates of growth

1. To conduct an analysis, you should select 2-3 quarters or years. Absolute (or relative) values ​​are consistently compared with similar indicators of later periods.
2. Horizontal analysis makes it possible to assess whether production indicators have improved or worsened in comparison with the year before last and last year.

When conducting a horizontal analysis, they first of all look at the result of the balance sheet for the Asset - if the value increases in columns (from previous to future periods), this indicates a favorable development of the company and its chances for further growth.

Further, attention is drawn to the dynamics of indicators of non-current assets: if there is an increase from period to period, then the company is actively working, and the management staff is making the right decisions on the way to improving the base.

The next thing to check is the solvency of the company, whether the company has free money in circulation and, importantly, whether they are used for investments in order to extract additional. arrived. All this can be judged by studying the dynamics of values ​​for items directly related to money - “Cash”, “Accounts receivable”, “Financial investments”.

And, at last, lines on the Passive are studied. In order to understand where the company under study has free money from, one should pay attention to changes in indicators under the items “Borrowed funds” and “Accounts payable”. Here, before drawing any conclusions, it is necessary to carefully analyze the company's policy regarding the attraction of third-party capital. Since balance sheet analysis can show an increase in debt, however, this can be a positive thing if the money is wisely invested and generates additional income.

Vertical balance analysis (structural). Examples with Conclusions

The basic information about vertical analysis of accounting data can be seen in the list below:

1. Structural analysis is to demonstrate the structure of the final information accounting. reporting in the form of relative indicators, expressed as a percentage. As a result of the study, the expert receives the values ​​of all balance sheet items in % of its total.
2. The advantage of a vertical analysis over a horizontal one is that it is difficult to see in absolute terms whether there is a positive or negative trend in the company's work. Relative values, on the contrary, make it easy to assess whether financial indicators have deviated for the worse or better, and to what extent. The obtained output data in relative terms will not allow for incorrect comparisons due to the influence of various external factors, such as the inflationary process.
3. This method of analysis differs from the horizontal one in that the vertical analysis is focused on the selected moment and gives an assessment of the position of the company on the day the report was issued. The method is used when necessary:

• see how, in comparison with previous periods, certain articles of accounting have changed. balance;
• compare the capital structures of several firms or enterprises of different fields of activity;
• find out the composition of non- and working capital;
• find out whether the size of the borrowed capital of the company has decreased or increased;
• check how the structure of liabilities and assets has changed.

The essence of using structural balance sheet analysis is as follows:

1. The total amount of revenue when analyzing the company's financial results report (form No. 2) is taken equal to 100%. If the balance sheet is examined, the total amount of assets is taken as 100%. Vertical analysis is also suitable for the study of the statement of cash flows (form No. 4) and changes in equity (form No. 3).
2. All balance sheet items are separately calculated as a percentage of 100% (ie, of the total assets or revenue). To implement this, the analyst must select the period (year) of the activity of the analyzed company, and then divide each individual line of the balance sheet by the accounting currency. balance, and then multiply the result by one hundred percent (because the value must be relative, in %).

Let's return to step 2 of the algorithm, which was given above the table. Let's find out how the values ​​​​in the table were obtained using the example of current assets:

Now that we understand how the data in the table was calculated, let's analyze it and draw conclusions:

• The amount of long-term debt of the analyzed company has slightly decreased.
• The value of own (share) capital is 50% of the total liability (this indicates that the company is characterized by an average level of stability).
• Short-term debt is a third of the size of the balance sheet and practically does not change.
• The number of OS objects is decreasing, because some of them are out of circulation.
• 63% of assets are working capital, and the increase in their share was the result of an increase in accounts receivable (the company's management should think about the reasons for its growth).

Let's try to carry out a vertical analysis of data for 2 years of operation of the enterprise in absolute and relative terms:

In general, professional financial analysts and auditors are engaged in the interpretation of a set of output data of the balance sheet, since it is necessary to be able to see the big picture and draw conclusions based on a comprehensive study. What can be said unequivocally to a non-specialist, looking at the table we received, is that:

• the analyzed company has no changes in equity in the form of authorized capital, but the amount of available equity increased by 8% due to the presence of retained earnings;
• the company has attracted a fairly large amount of borrowed funds, the Liabilities include > 60% of accounts payable, but the positive side is a decrease in the level of loans in dynamics;
• the company is solvent and quite stable financially, since there is a decent level of cash (48.22%);
• the company illiterately chooses counterparties for cooperation, most likely the current partners are insolvent, because there is a high level of receivables;
• the data from the table indicate that the level of receivables and stocks of the company is high, and therefore there are fewer non-current assets than current assets (the bad thing is that there may be extra costs for storing inventory (logistics), but the good thing is that managers take care of investing into uninterrupted production).

Answers to frequently asked questions on the topic “Horizontal and vertical balance sheet analysis”

Question: What are the advantages and disadvantages of using vertical and horizontal analysis of financial statements?

Answer: The positive side of the horizontal analysis is the possibility of assessing the dynamics of financial indicators over the years. A significant drawback is the fact that this type of analysis is not very suitable for assessing the financial condition and decision-making by managers - it is rather a diagnostic method. With regard to vertical analysis, it makes it possible to track changes in the structure of the A and P of the company, but also does not allow you to assess its financial condition.

Economic analysis uses various techniques that involve the calculation and evaluation of not only absolute, but also relative indicators, which include horizontal, vertical and trend analysis related to statistical methods, factor analysis (as a type of heuristic method with quantitative calculations based on expert evaluation) and calculation of coefficients (as a kind of economic and mathematical modeling).

Under vertical analysis refers to the presentation of data on the economic activity of the company in the form of relative indicators through the share of each article in the total and an assessment of their changes in dynamics (Table 2.3). Therefore, vertical analysis is also called structural analysis.

Relative indicators smooth out the impact of inflation, which makes it possible to fairly objectively assess the changes taking place.

Table 2.3

Vertical analysis of the balance sheet

Vertical analysis data make it possible, for example, to evaluate structural changes occurring in the composition of assets, liabilities, changes in other reporting indicators, the dynamics of the share of the main elements of the organization's income, product profitability ratios, etc. Therefore, for the purposes of vertical analysis, you can use not only final, but also interim reporting. When conducting a vertical analysis of the balance sheet, the shares of each of its articles in the balance sheet currency (total assets or liabilities) are calculated, and when analyzing the income statement, the shares of each of its articles in the revenue indicator. Then it is advisable to pay attention to how the values ​​of these shares change during the reporting period. In addition, it is convenient to compare the reports of companies that differ greatly in absolute value of indicators using vertical analysis data.

Since the balance sheet contains information about the composition of the company's assets and the sources of their formation, it is useful to compare the absolute values ​​of its sections. At the same time, it is determined which part of non-current and current assets (Sections I and II) is covered by own funds and long-term borrowings (Sections III and IV), and which resources are financed by short-term liabilities.

Compliance with the following balance proportions is considered a sign of the company's financial well-being:

• the most liquid assets (these include cash and short-term financial investments) should cover the most urgent liabilities (accounts payable) or exceed them;
• quickly realizable assets (usually these include receivables, deposits) should cover short-term liabilities (credits and loans that will mature soon);
• slow-moving assets (for example, inventories) should cover long-term liabilities (credits and loans that will not mature soon);
• hard-to-sell assets (usually they include land, buildings, equipment) must be covered by permanent liabilities (own funds) and not exceed them.

These comparisons are based on the grouping of the company's assets according to the degree of liquidity - their ability to quickly turn into cash and serve as a means of repaying liabilities. In the general case, the balance sheet provides limited opportunities for such a grouping, since many articles in it are given collapsed.

The vertical analysis also assesses the structure of liabilities or funding sources. Previously, it was widely believed that the share of borrowed funds in the liabilities side of the balance sheet should not exceed 50%. Many economists now recognize that debt financing can be more profitable than building equity. For example, in Japan, it is considered quite acceptable to exceed the borrowed capital over own capital twice. The best capital structure (in terms of minimizing maintenance costs) depends both on the return on equity and on the sensitivity of the lending rate to an increase in the share of borrowed funds.

Horizontal Analysis involves the study of the absolute indicators of the economic activity of the company for a certain period, the calculation of the rate of change and evaluation.

For the purposes of this analysis, analytical tables are constructed in which the absolute reporting indicators are supplemented by relative ones, i.e. the change in absolute indicators in the amount and in percentage is calculated.

Under conditions of inflation, the value of horizontal analysis is somewhat reduced, since the calculations made with its help do not reflect changes in indicators associated with inflationary processes, but the results of horizontal analysis are used in inter-farm comparisons.

Horizontal analysis is often used to supplement vertical analysis of economic performance. Horizontal analysis - comparison of each reporting position with the previous period. It is next after vertical analysis. If, during a vertical analysis, the structure of articles is established at the beginning and end of the period, then at the stage of horizontal analysis, it is determined for which sections and articles of the balance sheet there have been changes. Dynamic (horizontal) analysis is designed to identify the dynamics of changes in reporting indicators over time. Based on the semi-annual reporting, it is possible to trace the change in balance sheet items for the half year, as well as the change in the company's income and expenses for the past six months compared to the same period last year. The main thing in carrying out this analysis is to establish the causes of the changes that have occurred. In this case, it is possible to use the following estimates (Table 2.4).

Table 2.4

Assessment of dynamic shifts in the balance sheet

An example of a horizontal analysis is given in Table. 2.5.

Table 2.5

An example of a horizontal analysis of financial statements

In the above example, the following positive changes can be noted in the dynamics of financial results. All types of profit in the reporting year increased compared to the previous year (gross profit - by 12.5%, profit from sales - by 16.4%, profit before tax - by 19.5%, net profit - by 65%).

Net profit is growing faster than sales profit and profit of the reporting period, which is explained by the rational tax policy of the organization.

The growth rate of expenses for the period is lower than the growth rate of revenue, which has a positive effect on the unit cost of production.

However, there are also negative developments: sales profit is growing more slowly than sales revenue, which indicates a relative increase in production costs.

Drawing up a balance sheet is a logical end to the reporting period. But not the end of the financial work. It is important to be able to read a finished accounting report, because the habit of understanding what is really happening with a business can become very profitable. To read the balance is to understand and comprehensively analyze its articles. As an example, consider a horizontal balance sheet analysis.

The concept of horizontal analysis and its main indicators

Horizontal balance analysis is an assessment of individual indicators (items) in dynamics for a number of equivalent time periods (quarter, year). It is based on the principle of comparing reporting indicators (B 1) with previous ones (B 0). It allows you to determine the trend of changes in individual items of the financial report, therefore it has the second name "trend".

According to the degree of complexity of calculations, horizontal analysis is the most accessible. Traditionally, the following analytical quantities are calculated:

• Absolute deviation (in monetary units): ΔB = B 1 - B 0;
• Relative deviation (in percent): ΔB \u003d (B 1 - B 0) / B 0 × 100;
• Index (rate) of growth: T B = B 1 / B

Interpret the calculation results as follows:

• if the deviation ΔB has a positive value or the index T B ˃ 1, then the balance sheet item has increased;
• if the deviation ΔB turned out with the sign "‒" or T B< 1, то статья уменьшилась.

A professional accountant must know when positive deviations are good and when they are bad. For example, an increase in cash, profits, property is a positive trend. But if, in parallel with cash, accounts payable also increases, and retained earnings are reduced, which increases the financial dependence of the company, then monetary joy is not so unambiguous.

Horizontal analysis and the "golden rule of economics"

The horizontal method evaluates not only the balance sheet of the enterprise, but also the income statement. The data from these reports is used to compare the pace of development of the company according to various criteria.

The "Golden Rule of Economics" makes it possible to assess the potential of an enterprise. It implies the following principles of success:

• Profit, income, equity and assets should grow, which indicates the growth of economic potential;
• Profit should grow faster than revenue, which proves the reduction in costs;
• Incomes should grow faster than equity, which characterizes the attraction of funds at the expense of buyers, not founders;
• Equity should grow faster than assets because financial independence is very important for a company.

Growth in net profit and equity is a good trend. But if profit grows more slowly than capital, then the company does not fully use the opportunities to improve the efficiency of commercial activities.

Formal analysis of indicator deviations does not make it possible to draw correct conclusions. Special knowledge is needed to evaluate changes in the report in a comprehensive manner, in the relationship of different indicators.

Calculation example for horizontal balance sheet analysis

Let's analyze the balance sheet of a conditional enterprise in an abbreviated form.

Conclusions after calculations:

• In general, the property of the enterprise increased insignificantly (by 83 thousand rubles or 1.51%). This testifies to the stability of the company in the conditions of the financial crisis;
• In the asset balance, there is an increase in non-current assets (by 4.4%) and a decrease in current assets (by 0.9%). This is a worrying factor because the company is reducing its liquidity;
• In liabilities, capital increased most actively (by 99 thousand rubles or 5.23%). Long-term liabilities decreased by 20 thousand rubles. (80%), which may indicate the timely repayment of a long-term loan. Short-term liabilities actually remained at the same level (growth less than 1%).

An enlarged report does not allow drawing deeper conclusions. It would be correct to supplement the horizontal financial analysis with a vertical one in order to assess the structure of the balance sheet.

Tip: independently calculate the absolute and relative indicators of changes in balance sheet items (you can use Microsoft Excel), and then prepare their interpretation using your own knowledge and financial advice from reputable specialists.