This presentation discusses vertical analysis, which is used to find financial percentages in financial statements. Vertical analysis examines how each line item on an income statement or balance sheet relates to the total by expressing it as a percentage. It allows businesses to compare financial metrics over time and against other companies. The presentation provides examples of how vertical analysis appears on an income statement and balance sheet by listing each item as a percentage of the total. Real-world examples from UPMC and Pinnacle health systems are also presented.

1. VERTICAL ANALYSIS
PRESENTED BY:
ERIN NEWCOMER
NOVEMBER 11 2017

2. LEARNING OBJECTIVES
• AT THE END OF THIS PRESENTATION YOU WILL BE
ABLE:
• UNDERSTAND THE USE OF VERTICAL ANALYSIS
AND WHY IT IS IMPORTANT IN ANY BUSINESS
• WHAT VERTICAL ANALYSIS LOOKS LIKE IN
REGARDS TO AN INCOME STATEMENT OR A
BALANCE SHEET

3. VERTICAL ANALYSIS
• VERTICAL ANALYSIS DEALS WITH THE FINANCIAL
STATEMENT AND IS USED TO FIND FINANCIAL
PERCENTAGES.
• VERTICAL ANALYSIS IS COMMONLY USED IN A FINANCIAL
STATEMENT, AND IT IS USED TO SEE THE CHANGES IN
THE TIME LAPSE.
• ANYONE IN THE FINANCIAL FIELD HAS TO UNDERSTAND
VERTICAL ANALYSIS AND HOW IT PERTAINS TO THE

4. WHAT IS THE BENEFIT OF KNOWING THIS
• VERTICAL ANALYSIS IS IMPORTANT TO
UNDERSTAND BECAUSE IT SHOWS A SNAPSHOT OF
THE COMPANIES FINANCIAL POSITION BASED OFF
LINE NUMBERS
• THIS IS NEEDED FOR A COMPANY TO SEE HOW
THEY RANK AMONG OTHER BUSINESSES AND TO
SEE THE CHANGES THE COMPANY HAS OVER THE

5. WHAT IS FINANCIAL ANALYSIS
• IT ALLOWS FOR BUSINESSES TO BE ABLE TO
COMPARE THEIR NUMBERS WITH ONE ANOTHER
• ALLOWS FOR A STANDARD PROCESS THAT CAN BE
USED IN ORDER TO MAINTAIN UNIFORMITY
WITHIN THE DIFFERENT BUSINESSES
• IF A BALANCE SHEET HAS VERTICAL ANALYSIS IT
WILL HAVE LINE ITEM PERCENTAGES IN A

6. FINANCIAL ANALYSIS EXAMPLE
• AN EXAMPLE OF VERTICAL ANALYSIS IS:
• SUPPOSE ABC CORPORATION HAS THREE ASSETS: CASH
AND CASH EQUIVALENTS WORTH 3 MILLION, INVENTORY
WORTH 8 MILLION AND PROPERTY WORTH 9 MILLION
• WHEN USING VERTICAL ANALYSIS IT WILL LOOK LIKE:
• CASH AND CASH EQUIVALENTS: 15%
• INVENTORY: 40%
• PROPERTY: 45%

7. FINANCIAL ANALYSIS IN REGARDS TO A
SPREADSHEET
•EACH LINE ITEM ON THE FINANCIAL
STATEMENT IS LISTED AS A PERCENTAGE OF
ANOTHER ITEM
•IT MEANS THAT IT IS LISTED AS A
PERCENTAGE OF GROSS SALES ON AN
INCOME STATEMENT

8. VERTICAL ANALYSIS VISUAL EXAMPLE
• EXAMPLE OF A CONDENSED INCOME STATEMENT
$ Total Percent
Sales $1,000,000 100%
Cost of goods sold 400,000 40%
Gross margin 600,000 60%
Salaries and wages 250,000 25%
Office rent 50,000 5%
Supplies 10,000 1%
Utilities 20,000 2%
Other expenses 90,000 9%
Total expenses 420,000 42%
Net profit 180,000 18%

9. REAL WORLD EXAMPLE #1
UPMC
Pinnacle 2016

10. REAL WORLD EXAMPLE #2

11. LEARNING OBJECTIVES REVIEW
• UNDERSTAND THE USE OF VERTICAL ANALYSIS
AND WHY IT IS IMPORTANT IN ANY BUSINESS
• WHAT VERTICAL ANALYSIS LOOKS LIKE IN
REGARDS TO AN INCOME STATEMENT OR A
BALANCE SHEET

12. THANK YOU FOR WATCHING
• FOR MORE INFORMATION CONTACT ME VIA LINKEDIN:
• ERIN NEWCOMER
• LINKED IN URL: WWW.LINKEDIN.COM/IN/ERIN-
NEWCOMER-5A3B9A115