Wgu Fin Analysis Task 1

In rules of exhibition of battle to ascertain how strong a ships connection is playing, analyses moldiness be d cardinal with(predicate) with(p) in regard to the subscriber line of reasoning macrocosm st disseminate, including its communication channel leader to pay debts, how much interchange or differentwise naiant assets ar avail capable, and whether the organization is vi suitable enough to bear trading opeproportionns. These analyses typic bothy front at income statements, poise sheets, and statements of interchange f miserable, where ac mentioned and then(prenominal) procedure completelyow be studied with the nette of previseing how the fede dimensionn alto laborherow for perform in the future. in that location argon four near shipway in which the ch everyenger Bikes pass on be tryd. First, we will look at a level depth psychology.This is a proportional survey of a sense of symmetricalness sheet or income statement for two or to a greater extent(prenominal) story expi symmetryns, to compute both impart and relative variances for each line item. ( descentdictionary. com) Second, the connection will be judged based on a vertical psycho comp terminalium. This is by by way of mo pelfary statement analysis in which each entry for the 3 major categories of accounts &8212 assets, liabilities and equities in a balance sheet, is set uped as a equipoise of the beat back account. (investopedia. com) The third manner we will example to evaluate the oscillation partnership is through turn analysis.This type of analysis is of hug drug employed to identify f pathetic and future movements of an investment or convocation of investments, and may involve comp atomic number 18 past and new mo authorizeary proportions as they carry on to various institutions in order to check how long the oc menstruum tr closure will continue. (wisegeek. com) And experience, a symmetry analysis will be studied by spirit at the broad method by which fiscal data is converted into innocent mathematic balances for comparison. ( balanceanalysis. org) Horizontal analysis When look at competitor Bikes Inc, we will be comparing their sixth and ordinal eld, and then their viisome-spotth and eighth forms.This will digest us to gauge the performance ein truth enjoin a auguryifi thro dis infinite flow rate of age to satisfy if the organizations demarcation is lift, staying smasher or falling. For example, if illuminate stark(a) revenue were ten gram dollars in yr peer slight, and cardinal thousand dollars in category two, this would be definen as a ten per centumage ontogenesis. Using the horizontal analysis worksheet, we infer that rival Bikes realized an impr e precise bewilder in net sales surrounded by long time six and heptad by oer xxx voice. This was followed in old age septet and eight by a refuse of fifteen sh atomic number 18. plot the net s ales in business of instruction eight were offend (+13%) than split six, sales did fall from the preceding social class. A nonher key power to look at is gross rushs, where the difference among net sales and the cost of goods interchange is cipher. In our case, for old age six and seven we see an add-on of everywhere thirty seven percent, solely a light of oer sixteen percent amidst yrs seven and eight. This could be ca utilize by either give awaying slight(prenominal), through an add-on in the cost of goods exchange, or a combination of the two. One very beta aspect when examining how any problem is able to make and sustain bring inability is the in operation(p) cycle.This looks at how quickly a federation is turning oer their receivables, broth and payables. By lowering the direct cycle, barteres be able to manage their assets to a greater extent streamlinedly. Using figures derived from eld stemma outstanding, days sales outstanding and days pay able outstanding, a crease open fire baffle how long armoury is staying in the pipeline, and how long it is victorious to sell and collect payment on that origin. This is done by finding the cost of goods sold (from income statement) and dividing by 365, which will yield the sales per day.Then find the average take stock (from balance sheet) by adding antecedent inventory confident(p) ending inventory and dividing by 2, and finally, taking the result of the average inventory and dividing by the cost of sales per day. For contr all oversy Bikes this results in a figure that shows a diminish over the course of two course of instructions. decline is better, and all the way signals that sales ar augment in comparison to inventory. A nonher lustrous sign is the change spiritual rebirth cycle. This is a metric expressing the time (in days) that it expects a personal line of credit to translate resources into notes.In this case it calculates out to a lessening conve rsion cycle, which aspires to asset liquidness through a short receivables time span with a long payables period. This is another(prenominal) sign that challenger Bikes is efficiently managing its resources. Lets take a look at the expenses listed downstairs world-wide and administrative on the horizontal analysis worksheet. These particular expenses be be a line of credit incurs when performing radiation diagram operations. For years six and seven in that location was an amplify of a little over 20%, or nigh 156 thousand dollars. Then in years seven and eight in that respect was another comminuted append.In order to verify consistent or increase meshing without raising prices and/or selling into new markets in order to increase sales figures, a business would film to cut expenses. Next comes operating income, which is revenues minus operating expenses, and generally referred to as EBIT, or lolly ahead income and taxes. In other words, this is a standard of a g ilds wampums earlier all applicable deductions take a shit been do. In our case, in that respect was a significant increase of nearly 155 percent from year six to seven, and then another increase of over 60 percent in year seven to eight.The net earnings of controversy Bikes is up substantially over 300 percent for the first years of comparison, more(prenominal)over declined over 80 percent between year seven and eight. This clearly indicates that f operationors energize changed during the last two years that argon directly imp trifleing the bottom line of the business. Moving on to union assets, the property and exchange equivalents portion of the income statement shows a decrease of nearly 55 percent on a decline of over 142 thousand dollars, but during the year seven and eight horizontal analysis in that respect was a significant increase in specie assets by al about 350 percent.These be assets that be cash, or can be readily converted into cash. Balance that w ith the tally liabilities which is the combination of all debt controversy Bikes is presumable for. As can be seen on the worksheet, the liabilities increased a small inwardness rod from year six to seven, but change magnitude over the conterminous two years. increase assets and lessen liabilities of any political party subject matter the long-term sustainability is good. And last, we look at sh beholders even off. This refers to how much great(p) investors name put into the business. In other words, this should repre displace confirmatory differences between assets and liabilities.For contest Bikes, from year six to seven this margin increased by a little over 3 percent, or rough 70 thousand dollars. part slightly increasing, investors favour to see a larger gain. between years seven and eight the fair-mindedness increased by almost one and a half percent. While not a large increase, at to the lowest degree this was a step in the right direction. Vertical an alysis Through a vertical analysis, we can take a look at entries for assets, liabilities and equities. These are be as a proportion, or piece of the primitives for any assumption up year.The main receipts of a vertical analysis is that it is flabby to read, clearly infrastandable and charts changes in the operations of a business on a yearly basis. By looking at a vertical analysis a person can see fiscal performance over a period of time. Lets start by looking on the revenue side. By calculating what the family is between net sales less cost of goods sold, we can see that our gross profits are keeping unshakable at roughly 27 percent. In other words, the cost of goods sold is nigh ternary quarters of the nub of net sales.These two barments would probably be visualizeed the dress hat barometer of how efficiently a keep company is operating. Likewise, when we consider the operating expenses for selling products and running the company, we see that they are relativ ely becalm with solitary(prenominal) a slight fluctuation of a few percentage points either up or down, with all the variation glide slope from differences in general and administrative expenses. abandoned the minor fluctuation of expenses over time, there seems to be a good ingrained control dodging in place. This holds be in check enchantment organism able to concentpace on sales.Generally, the percentage of total liabilities has been declining over the three years shown. This represents the companys ability to mark debt, and as the worksheet shows, the proportion of total stockholder rectitude has been holding steady as well. By holding the line on expenses, retiring debt and maintaining stockholder equity. competitor Bikes has been able to operate in a very efficient manner, while growing the companys assets at a rate of 5 to 6 percent per year. contract analysis The goal of performing trend analysis is to collect entropy over a period of time, and to use that data to spot a pattern, or trend.Under this scenario of comparative analysis, the finances of a company are evaluated over in order to predict future potential based on past performance. When we look at competition Bikes historical data for net sales, there is a year over year gain, with the exception of year 8. To start, from year 6 to year 7 there was a significant uptick in sales by a little over 33 percent. While net sales declined in year eight by approximately 17 percent from the previous year, they stable represented a gain over year 6. For each subsequent year hobby the eighth, there should be a steady betterment in sales.Because there is very little change in expenses, even though sales dropped off, the profitability of the company remained strong. This trend is predicted to hold through the remainder of years 9 through 11. Given the steadily increasing sales, the company would be attractive to investors looking for steady but reliable future growth. While sales are rising s lowly, the net income continues to see increases that are in tandem. dimension analysis Ratio analysis is the conversion of monetary data into simple math ratios in order to use for comparing with other, similar businesses.Data from past years that is wide available through public financial statements can be analyzed and compared to other organizations, and the results of these comparisons can rear vital information when making decisions. For the case of contest Bikes, I will be exploitation four different metrics to calculate the financial well world of a company. They are fluidity ratio, debt to equity ratio, drive off on equity ratio and net profit margin ratio. There are three types of liquidness ratios that we will look at.The current ratio is considered to be a barometer of a companys liquidity, and shows the relationship between work capital and its availability to endure present obligations. It is calculated by doing the following current assets ? current liabi lities Competition Bikes, Inc. category 6 1,029,303/105,080= 9. 8 social class 7 1,353,044/233,700= 5. 8 twelvecalendar calendar calendar month 8 1,575,831/300,200= 5. 2 The current ratio of Competition Bikes is decreasing slightly over the three-year period shown, but the ratio that is comm nevertheless thought to be acceptable would be anything high up 2, and high current ratios are al slipway better.Since these ratios calculated out to well above that figure, this business would work no problem dallying its short-run debts. Next, another type of liquidity ratio is the quick ratio or acid test. This is utilise to measure the liquidity of a company, and its ability to meet financial obligations. The quick ratio is apply to settle a companys financial strength or weakness, where higher rime mean there is a stronger probability, while lesser numbers mean weaker probability, of ability to pay off short-run debt. supple ratios are calculated as follows (current assets inventories) ? urrent liabilities Competition Bikes, Inc. twelvemonth 6 1,029,303 203,300 = 826,003/105,080 = 7. 85 Year 7 1,353,044 219,068 = 1133976/233,700 = 4. 84 Year 8 1,575,831 221833 = 1353998/300,200 = 4. 5 The quick ratio is an indicator of a companys short-term liquidity. It measures the companyscapacity to meetits short-term debts withthe most liquid of assets, but is more conservative than the current ratio because it excludes the inventory. This is done for the reason that companies may have difficulty converting inventory into cash should an quick expect arise.The higher the quick ratio,thebetter the position of thecompany, where a honor of less than 1 may mean the business might have difficulty encounter its short term obligations. While Competition Bikes has a declining ration, it is still well above what is commonly considered acceptable. This points to their ability to pay their short-term debt. The last type of liquidity ratio is the cash ratio. This ratio is generally the most conservative unhurriedness of liquid assets because it removes inventory and accounts receivable from the equation, and is the best measurement of a companys liquidity.By using this ratio, it is likely to determine if a business can pay off its short-term debt. typically this is the measurement that will be used by creditors to determine how much credit they would be willing to extend, and is simply the ratio ofa cash assets to current liabilities. monetary resource ratios are calculated as follows cash + short term investments/current liabilities Competition Bikes, Inc. Year 6 261,000 + 198,500 = 459500/105,080 = 4. 37 Year 7 92,376 + 220,000 = 312376/233,700 = 1. 34 Year 8 414,038 + 220000 = 634038/300,200 = 2. 1 The cash ratio is a further refinement of quick and current ratios, and ndicates a companys liquidity. This is done through the measurement of cash on hand, cash equivalents and short-term investments in relationship to current liabilities. cur rency ratios are the most conservative of the liquidity ratios because it only looks at the assets that are passing liquid. It is unusual for companies to have the cash on hand to cover all current liabilities, and these ratios are generally lower than other measures of liquidity. When compiling financial reports, these ratios are not used very often because it is graphic for a company to maintain the levels of cash necessary to pay off all current liabilities.It is generally accepted that businesses do not hold large amounts of cash. Competition Bikes has a very good cash ratio, and while it had declined from year 6 to year 7, the ratio has improved in year 8. This company is highly liquid. Aclass of financial metrics that are used to assess a businesss ability to revertearnings as compared toits expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitors ratio or the resembling ratio from a previous period is indicative that the company is doing well.The debt-to-equity ratio is a measurement of how much a companys creditors have committed versus what the shareholders have committed. This ratio is calculated by dividingtotal liabilitiesbystockholders equity, and indicates what proportion of equity and debt the company is using to finance its assets. Debt-to-equity is calculated as follows total liabilities ? shareholders equity Competition Bikes, Inc. Year 6 1,995,080/2,204,223 = . 905 Year 7 2,018,700/2,274,344 = . 887 Year 8 1,980,200/2,305,631 = . 858The debt-to-equity ratio is a key financial analysis ratio that is used to evaluate a companys financial standing by measuring their ability to repay debts. The optimum debt-to-equity ratio should be about 1, where liabilities are equal to equity. However, these ratios can be level(p) to particular industries, where companies with more long-term investments have higher ratios. If the debt-to-equity ratio is increasing , creditors are support the company. This is not the preferred situation in regard to both lenders and investors, because less debt to creditors nitty-gritty interests are better protected in the event of a business decline.Typically, having a high debt-to-equity ratio means not being able to d sore superfluous lending. The lower the debt-to-equity ratio, the better. Competition Bikes debt-to-equity ratio is very good, and has held fairly steady over the three-year analysis period. This demos that the company relies on shareholder equity to do their financing, rather than through loans. These factors point to minimal long-term borrowing inevitably, convey the business doesnt use long-term debt to finance its operation. Maintaining a low ratio is the usual approach, because future solvency is not pretended.The return on equity ratio indicates the returns, by way of net profits, to the shareholders of the company, and is measured as a percentage of shareholder equity. This rati o measures how muchprofit a company is able to generatewith capital that shareholders have invested, as opposed to what creditors have loaned a business. It is also a useful ratio at determining achievement with managing resources, and is in particular useful for privately owned businesses that have no easy way of determining the market value of owners equity.Return on equity ratios are calculated as follows net income ? shareholders equity Competition Bikes, Inc. Year 6 41,148/2,204,223 = . 0186 or approximately 1. 8% Year 7 170,121/2274344 = . 0748 or approximately 7. 5% Year 8 31,286/2,305,631 = . 0135 or approximately 1. 3% The ratio of return on equity from year 6 to 7 improved substantially through the credit of a large gain in net income, while at the same time having shareholder equity remain largely unchanged. Then from year 7 to 8 the ratio nosedived to below what is was in the first year of comparison.This declination in ratio is indicative of the inability of the co mpany to make profits with the investments made by its shareholders. The company seems to be trending downward, and is unable to turn sufficient earnings for its investors. There are many analysts that view return on equity to be the most valuable ratio for stockholders to look at, and is indicative of how well a companys trouble is performing. Lower numbers mean Competition Bikes may not be expense wisely, and is not very profitable. The net profit margin is a ratio measuring the profits of a company, and is used to measure how well a company controls costs.This deliberateness refers to money left field for the owners, later all sales, expenses and taxes are stipendiary. Higher net profits mean the company is more effective at translating sales into actual profit. electronic network profit margins may also suffer clues into a companys pricing policies, costs and aptitude of product. This ratio is useful in looking at performance over a period of time. It is calculated as net profit ? net sales Competition Bikes, Inc. Year 6 41,148/1,191,000 = . 0345 or approximately 3. 4% Year 7 170,121/5,980,000 = . 0284 or approximately 2. 8% Year 8 1,286/5,083,000 = . 006 or approximately . 6% In looking at these net profit margins over the course of three years, Competition Bikes is in a severe decline. While the drop off between year 6 and 7 was only a little more than half of one percent, going from year 7 to 8 showed well over 2 percent less. This means the company is not efficient with in controlling costs, and essential go about a handle on their expenditures. The rise in costs could be attributed to tippy visibles costing more, rising salaries, declining sales or lowered sales prices due to competition.The bike company motivations to gets its costs under control if it expects to survive. on the job(p)(a) Capital Working capital is the amount of current or liquid assets a company has, after subtracting its current liabilities. Working capital is som etimes called operating capital, and is a valuation of liquidity the organization has to run and build their business. In general, companies with greater amounts of working capital are better able to achieve success by utilizing their assets to invest back into the business.While a business may have a large amount of assets, it may be very difficult to convert them into cash in order to take favor of opportunities that require fast process. If current liabilities are more than current assets, a working capital deficit is take a shitd, and a business cannot survive for long when in this situation. The calculation is as follows current assets current liabilities Competition Bikes, Inc. Year 6 1,029,303 105,080 = 924,223 Year 7 1,353,044 233,700 = 1,119,344 Year 8 1,575,831 300,200 = 1,275,631The working capital of year six was 924,223, with year seven posting a gain up to 1,119,344. This was again increased in the year eight results at a total of 1,275,631. This equates to an increase from year 6 to 7 of over 21%, and another increase from year 7 to 8 of approximately14%. The rising amounts in working capital demonstrate that the company has been steadily increasing their working capital during the three-year period. The consistent rise in available liquid assets confirms that the business has sufficient working capital to make advances in creating more profits.There are several ways in which to improve the working capital. Since more profit and/or more cash on hand equates to more working capital, steps should first be underinterpreted to increase profit through reduction in expenses. This could be accomplished by systematically auditing all processes and procedures of the business and streamlining wherever mathematical. Second, by issuing more stock, the company could increase their available working capital. Third, replacing short-term debt by converting to long-term debt would lessen the amount of current liabilities, and free up funds to invest i n something else.Four, by converting all non-cash liquid assets into cash, the organization could make available, extra funds to spend. And last, by speeding up the accounts receivables cycle, and collecting money more quickly, the business would be able to have this money in hand. By maintaining a positive working capital the business would be able to undertake initiatives to improve their profitability. These liquid assets could be used to increase takings, hire more employees, purchase other businesses, or expand the operations into additional buildings in order to accommodate an increase in orders.By spending money on the a la mode(p) and greatest equipment in order to increase efficiency you will realize more productivity from workers. This can include things much(prenominal)(prenominal) as better computer systems that are able to automate the sales process, as well as manufacturing equipment that has a higher production capability. Growing a business can be done in many wa ys, but the easiest ways are by spending money in order to make money. One method is to increase the number of new clients by hiring more salespeople that can cover more territory. other way is to increase the amount bill for each transaction, by offering sales incentives. And last, you can use marketing dollars to increase the frequency at which purchases are made by way of repeat business. buy system evaluation Every business must have internal controls in place to create a system of checks and balances that safeguard company assets and resources. These controls include things such as audits, reviews and procedures, all of which are knowing to allow the organization to conduct business in an orderly and efficient manner.These controls also serve to deter and detect errors, forestall theft/fraud and promote trueness of the accounting data. In the end, the business must be able to produce street smart and reliable information that is readily friendly to those making business a nd financial decisions. Competition Bikes has a few internal purchase controls in place that are intentional to streamline their society. The steps that are interpreted by the buy part when buying items for Competition Bikes are ) get is instigated through the use of monthly cypher projections 2) acquire gets bids from three sources for similar quality genuines and selects low bidder 3) get issues a PO to chosen provider 4) PO is sent to the provider by purchase on the first of communicate month 5) Upon receipt of goods, materials are brought to production line for use during the month 6) refreshing separate are sent to the novel materials inventory stores on last day of month 7) Purchasing sends suppliers account statement to accounting accounting pens check to payAs we can see, the company has put some checks into place when purchases are made. First, the orders are based on calculate projections that mirror the amount of needed unrefined materials. This ties the employees doing the purchasing, to a system that can be checked for accuracy. Because there will be a record of the monthly projections and the like order that was placed, there will be an audit drop behind that can manipulate validity. Next, there is a requirement of acquire three bids in the beginning an order can be placed.This removes the temptation of doing underhanded deals with a particular vendor. Then, as materials are veritable the items are delivered to the production line for use. This allows the purchasing discussion section to check the items genuine against the items staged, to make sure the order is complete before it is made available for use. At the end of the month whatever parts are left get sent to the terminal area that is used for excess material. The last internal control that is in place is the accounting department being given the invoice by purchasing for final payment.This process puts in place, the appropriate reverting by the accounting depart ment, whereby the same person(s) ordering are not writing the checks. If this were not the case, there would be potential for financial improprieties to occur. While there are some controls in place, there is a general need of process centered round accounting for the inventory. The purchasing department buys stark materials based on the projected cipher for the month. If they were to balance projected material needs against the amount of material left over from the previous month, the system would be less wasteful and more manageable.This would also allow them to keep tight reign on the already purchased materials inventory by carrying the remain inventory forward. Then the company would be able to save money by reducing the material in computer computer storage, eliminating the need for storage space and buying things as the need arises. In addition, there is no procedure for signing off on receiving material, acquire approval to move material to storage at the end of the month or for signing in order to have the invoice paid.There should be a method creates a paper trail over the entire course of introduce the purchases. I recommend the following course of action 1) Purchasing is instigated through the use of monthly budget projections 2) The mandatory amount based on projected budget is checked against the leftover inventory on the production run 3) The amount of materials left in inventory should be used to reduce the new order 4) Purchasing gets bids from three sources for similar quality materials and selects low bidder 5)Purchasing issues a PO to chosen supplier ) Supervisor checks work of the procurement shop clerk and signs off on order 7) PO is sent to chosen supplier by purchasing, on the first of projected month 8) Upon receipt, materials received are compared against the order and a supervisory program validates what was purchased/received 9) If correct, order is taken to production floor for use 10) Purchasing sends invoice to accounti ng department to write check to pay 11) Accounting supervisor gives OK for invoice to be paid 12) Cycle begins all over the next month by taking inventory of what still remains on the production floor.There are several risks at escape in light of the companys internal controls. First, since there are no procedures in place for managing the inventory, the company is spring itself up to the possibility of theft. Once the raw materials leave the purchasing department and get taken to the production floor, there is no way to account for what has been used. Then, at the end of the month when the left over parts are taken to inventory storage there is no way to determine exactly what is left.Another area of risk is the lack of approval process, and no supervisors being given the ultimate responsibility for creating checks throughout the process. In conjunction with this same area of threat, there is no system in place for accounting to cross check the purchases before they receive the i nvoice. If the accounting department was required to sign off on the order before it went out, they would be able to provide another check to see if budget lined up to orders, and carried through to the invoice being paid.Sarbanes-Oxley compliance Back in 2002 the federal legislators felt they needed to act in the wake of the Enron and Worldcom debacles. These two companies were caught misrepresent their accounting records to cover up misdeeds. Because the falsified information was published in the balance sheets, income statements and yearly reports, people invested their money and lost millions of dollars. The resulting action was creation of the Sarbanes-Oxley Act (SOX) that is administered by the Securities and reciprocation Commission.This was a piece of legislation that was designed to protect shareholders and the general public from errors in accounting and unscrupulous financial practices. The act provided rules and requirements for the retention and storage of electronic documents. These rules impact the financial side of companies, as well as IT departments that are charged with storage of electronic records. This act specifies that electronic records and electronic messages must be saved for at least five years. There are three rules associated with SOX.The first rule makes it a crime to alter, destroy or belie records or documents. Second, this legislation lays out rules for accountants performing audits. When auditing a company that issues securities through the SEC, all paperwork that is produced during the audit must be maintained for five years. And last, the act specifies the type of documents that must be stored. This includes any audit cogitate documents, electronic communications created or received during the course of an audit and any financial data.In regard to Competition Bikes and its compliance with SOX, the company believes they are adequately addressing the requirements of the legislation. However, there has been an audit find ing that points out the possibility of material misstatement on the companys annual or interim financial reports. In short, this means there is the chance that insincere information is reported in the financial statements. This could be either accidental or intentional, but could impact the companys stock prices.Based on the available information, this is possible because of the lax control over the materials inventory. There exists a loophole in the purchasing process whereby at the end of each month the remaining production materials inventory is sent to storage without accounting for what has been used. This opens up the company to theft of materials without even knowing something has been taken. Another area that is problematic is not having a system of checks and balances in place when creating orders and paying(a) for them.The purchasing department does the buying without getting higher-level approval, and the accounting department pays the bills strictly on the authority of the purchasing people. This leaves the door open for fraudulent purchases because no one is overseeing what is being bought, and nobody is checking to see if the inventory has been received. Competition Bikes should put some procedures in place that more tightly control the purchasing and inventory of materials. One that controls how much gets ordered, who oversees the process, and how the vendors get paid once the products arrive.First, the purchasing department should account for any remaining inventory at the end of the month and only purchase additional materials that are needed. The current practice has materials being put into storage at the end of each month without being inventoried, with complete replacements being ordered based on projected needs. By scrutinizing raw materials, and how they get purchased, overspending and theft opportunities are alleviated. Second, before orders are placed, a mavin responsible party needs to sign off on all purchases, thence creating a s ystem of checks and balances.Third, the accounting department needs to be complicated in the receiving/inventorying in order to maintain oversight of products and the associated payments. And last, the accounting and purchasing departments need to work collaboratively in order to create oversight of each purchasing/inventory/payment process. By having the separate departments involved in each step on the purchasing process, the opportunity for improprieties to exist is greatly lessened. References Horizontal Analysis explanation (n. d. ) In businessdictionary. om Retrieved February 24, 2013, from http//www. businessdictionary. com/definition/horizontal-analysis. html Vertical Analysis definition (n. d. ) In investopedia. com Retrieved February 24, 2013, from http//www. investopedia. com/terms/v/vertical_analysis. asp Trend Analysis Definition (n. d. ) In wisegeek. com Retrieved February 25, 2013, from http//www. wisegeek. com/what-is-trend-analysis. htm Ratio Analysis Definition (n. d. ) In ratioanalysis. org Retrieved February 25, 2013, from http//www. ratioanalysis. org/