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VERTICAL ANALYSIS
MEANING
VERTICAL ANALYSIS IS A TOOL OF FINANCIAL STATEMENT ANALYSIS WHICH REPORTS
EACH AMOUNT OF THE THREE CATEGORIES OF ACCOUNTS THAT ARE ASSETS, LIABILITIES
AND EQUITIES AS THE PERCENTAGE OF TOTAL AMOUNT THAT IS IN A PROPORTIONATE
WAY. IT IS ALSO KNOWN AS THE COMMON SIZE ANALYSIS SINCE IT FOCUS ON THE
RELATIVE SIZE OF THE ITEM SO THAT THE USER OF FINANCIAL INFORMATION CAN EASILY
COMPARE IT WITH THE INFORMATION OF OTHER DIFFERENT SIZED COMPANIES.
VERTICAL ANALYSIS V/S
HORIZONTAL ANALYSIS
Basis Vertical Analysis Horizontal Analysis
(for further information click the link here)
Nature Comparison of items of financial statements
to the common item of same accounting
period
Comparison of items of financial statements
of one period or periods to the corresponding
items of base accounting period
Expression of change Change in items is expressed either in
percentage or in ratio
Change in items is expressed in absolute
terms or in percentage or in both
Benefits It helps in predicting or determining the
future relative proportion of an item to the
common item.
It indicates growth or decline of the item.
Purpose Determine proportion of the item to the
common item in same accounting period
Determine change in an item during an
accounting period
Formula Balance sheet item/ Total assets/ liabilities/
equities
(Change in amount of item/ amount of item
in base year)*100
Change in amount of item= amount in
current year- amount in base year
VERTICAL ANALYSIS OF BALANCE SHEET
VERTICAL ANALYSIS OF INCOME STATEMENT
HEY
FRIEND,
This was just a summary on Vertical Analysis. For more detailed information on this
topic, please type the link given below or copy it from the description of this PPT and
open it in a new browser window.
www.transtutors.com/homework-help/accounting/financial-statement-analysis-vertical-analysis/

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Vertical Analysis | Accounting

  • 2. MEANING VERTICAL ANALYSIS IS A TOOL OF FINANCIAL STATEMENT ANALYSIS WHICH REPORTS EACH AMOUNT OF THE THREE CATEGORIES OF ACCOUNTS THAT ARE ASSETS, LIABILITIES AND EQUITIES AS THE PERCENTAGE OF TOTAL AMOUNT THAT IS IN A PROPORTIONATE WAY. IT IS ALSO KNOWN AS THE COMMON SIZE ANALYSIS SINCE IT FOCUS ON THE RELATIVE SIZE OF THE ITEM SO THAT THE USER OF FINANCIAL INFORMATION CAN EASILY COMPARE IT WITH THE INFORMATION OF OTHER DIFFERENT SIZED COMPANIES.
  • 4. Basis Vertical Analysis Horizontal Analysis (for further information click the link here) Nature Comparison of items of financial statements to the common item of same accounting period Comparison of items of financial statements of one period or periods to the corresponding items of base accounting period Expression of change Change in items is expressed either in percentage or in ratio Change in items is expressed in absolute terms or in percentage or in both Benefits It helps in predicting or determining the future relative proportion of an item to the common item. It indicates growth or decline of the item. Purpose Determine proportion of the item to the common item in same accounting period Determine change in an item during an accounting period Formula Balance sheet item/ Total assets/ liabilities/ equities (Change in amount of item/ amount of item in base year)*100 Change in amount of item= amount in current year- amount in base year
  • 5. VERTICAL ANALYSIS OF BALANCE SHEET
  • 6. VERTICAL ANALYSIS OF INCOME STATEMENT
  • 7. HEY FRIEND, This was just a summary on Vertical Analysis. For more detailed information on this topic, please type the link given below or copy it from the description of this PPT and open it in a new browser window. www.transtutors.com/homework-help/accounting/financial-statement-analysis-vertical-analysis/