Vertical analysis

Income statement

The above vertical analysis ratios of Income Statement shows us about the financial condition of

Honda. As par the ratios have shown that Honda have immensely increased their cost of sales

during the last five years, and their other expenses have also increase with the passage of time

which have reduced the total net profits of the Honda over the years even Honda have registered

a annual loss in the year 2007, 2009 & 2010. Which is a indication and pint to think for that they

must now reduce their expenses and cost of sales to increase their profits in the future years.

Balance sheet

The Honda have increased its asset side over the years in terms of current year as it payed out

advances, long-term deposits, loan advances but also have reduced cash in few years.

The Honda have invested in assets more as compare to the liability side as in liabilities in some

years Honda have reduce many liabilities like deferred taxation, long term finance. In

comparison to the ratios of 2010 which is the current year.

Horizontal Analysis

Income statement

The above horizontal analysis of the income statement shows in accordance with the 2007 that

the company have increased its cost of sales while Honda does not have the amount of sales to

incurred the cost of those sales and the expenses have also increase over the years which and

combine have negative effect on the last two years in which Honda have bared savior loss.

Balance sheet

In the horizontal analysis the base year is 2007 in comparison to that ratios of 2007 Honda have

reduced its long term investments, trade debts and short term investment in assets side as it also

have a vast increase in fixed assets intangible assets. On the liability side in comparison to the

2007 they have increase over the years in almost everything rather decreasing their liabilities to

enjoy the maximum benefit this is 1 of the more reasons why they incurred such heavy losses

over the years.