when reviewing a company s financial statements two common types of financial analysis are horizontal analysis and vertical analysis both use the same set of data though each analytical approach is different 
horizontal analysis entails selecting several years of comparable financial data one year is selected as the baseline often the oldest then each account for each subsequent year is compared to this baseline creating a percentage that easily identifies which accounts are growing hopefully revenue and which accounts are shrinking hopefully expenses vertical analysis entails choosing a specific line item benchmark and then seeing how every other component on a financial statement compares to that benchmark most often net sales are used as the benchmark a company would then compare the cost of goods sold gross profit operating profit or net income as a percentage of this benchmark companies can then track how the percentage changes over time examples of financial analysisin q1 2024 amazon com reported a net income of 10 4 billion this was a substantial increase from one year ago when the company reported a net income of 3 2 billion in q1 2023 1analysts can use the information above to perform corporate financial analysis for example consider amazon s operating profit margins below which can be calculated by dividing operating income by net sales from q1 2023 to q1 2024 the company experienced an increase in operating margin allowing for financial analysis to reveal that the company earned more operating income for every dollar of sales 