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hello and welcome everyone in this short recording we are going to discuss about how to analyze financial statements specifically income statement so there are two ways to analyze income statement horizontal analysis or vertical analysis in horizontal analysis we try to find out trends so way of finding out trend is you divide current periods data visa base previous periods data and subtract 1/4 from it so you find whether visa based previous periods any particular variable like sales or cost either is it increasing or decreasing then try you try to comment on it then you try to think about the action that you have to take the second way to go about it is you try to do a vertical analysis in vertical analysis you express everything as a proportion of sales okay so the best way of understanding how to go about income statement analysis is by analyzing data so lets take an example and understanding and understand it better so the company is Puma its a European giant that majorly sells