The performance of the horizontal analysis of net sales and accounts receivable for Bond Company shows the following results:
Net sales increased in 20x2 to 104.61% while the Accounts Receivable increased to 194.89%.
Horizontal analysis or trend analysis of a financial statement is a comparison of the financial statement items to show their year-on-year performances and growth patterns over time.
Bond Company Income Statement for the Years Ended
December 31, 20X1 December 31, 20X2
Gross sales $78,400,000 $82,000,860
Less Returns and allowances 2,500,000 2,604,500
Net sales 75,900,000 79,396,360
Cost of goods sold 45,300,000 50,436,360
Gross profit 30,600,000 28,960,000
Selling and administrative 18,400,000 19,200,000
Income from operations 12,200,000 9,760,000
Interest expense 1,900,000 1,800,000
Net income before taxes 10,300,000 7,960,000
Income taxes 4,982,000 3,580,700
Net income 5,318,000 4,379,300
Accounts Receivable 26,000,275 50,672,000
Inventory 56,000,000 58,000,000
December 31, 20X1 December 31, 20X2 Horizontal
Analysis
Net sales 75,900,000 79,396,360 104.61% ($79,396,360/$75,900,000 x 100)
Accounts receivable 26,000,275 50,672,000 194.89% ($50,672,000/$26,000,275 x 100)
Thus, the performance of the horizontal analysis of net sales and accounts receivable for Bond Company shows that Net sales increased in 20x2 to 104.61% while the Accounts Receivable increased to 194.89%.
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