Unraveling Horizontal Analysis: A Step-by-Step Guide to Understanding the Balance Sheet

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One of the most important aspects to analyze in the balance sheet is the company's liquidity. This refers to its ability to meet its short-term obligations. Identifying a company's liquidity is essential for making strategic decisions, such as investing in marketing campaigns or acquiring new resources.

Another important aspect of a balance sheet analysis is the company's profitability. This involves assessing the company's ability to generate profits from its assets. With proper analysis, you can identify the areas of the company that are generating the most profits and those that need to be optimized.

In addition, the balance sheet also allows you to assess the company's solvency, i.e. its ability to meet its long-term obligations. This is especially important in the context of digital marketing, where growth opportunities may arise that require long-term investment.

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Breaking Down the Income Statement: An Essential Guide to Understanding Your Company's Finances
The income statement is a fundamental tool in the financial management of a company. Breaking down this report is essential to understanding and analyzing how the organization's finances are performing.

First of all, it is important to understand that the income statement shows the company's income and expenses over a specific period of time. Through this report, it is possible to determine whether the company is generating profits or losses.

The income statement structure is divided into several key sections. At the top is total revenue, which includes sales of products or services as well as any other sources of income. This revenue is subtracted from the cost of goods sold to determine the gross margin.

Gross margin is an important indicator of a company's profitability and shows how much money is left after covering direct production costs. It is essentially the difference between revenue and production costs.

After the gross margin, operating expenses such tunisia phone number library as sales, administrative and marketing expenses are subtracted. This results in the operating margin, which shows the profitability of the company's core operations.

Finally, financial expenses and taxes are subtracted to arrive at the net profit or loss. This number reflects the final result of the company's activities during the time period analyzed.

When breaking down the income statement, it's important to pay attention to several key metrics.


Horizontal analysis is a fundamental tool in the interpretation of a company's financial statements, and the balance sheet is one of the most important reports for carrying out this analysis. Horizontal analysis involves comparing the values ​​of a specific account over several periods, in order to identify significant trends and changes in the company's financial situation.

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To perform a horizontal analysis of the balance sheet, it is necessary to have a detailed understanding of the different sections and accounts that compose it. The balance sheet is divided into two main parts: assets and liabilities, and each of these parts is further subdivided into different accounts.

When performing a horizontal asset analysis, you are looking to identify how the company's different assets have changed over time. This includes assets such as cash, accounts receivable, inventory, and fixed assets. It is important to note that for the analysis to be effective, values ​​must be compared in percentage terms, as this allows relative changes in the different accounts to be identified.