in this module, you will learn about the purposes and uses of horizontal, vertical, and ratio analysis. horizontal analysis compare financial statement items to comparable amounts in prior periods with the goal of identifying sustained changes, or trends. vertical analyses create common size financial statements that express each line of the income statement (or balance sheet) as a percentage of total sales (or total assets). ratio analyses compare one or more financial statement items to an amount for other items for the same year. ratios take into account differences in the size of amounts to allow for evaluations of performance given existing levels of other company resources.