Vertical Analysis

Vertical Analysis is a financial analysis method that presents each item in a financial statement as a percentage of a base figure. An income statement typically means expressing each line item as a percentage of total revenue. A balance sheet shows each item as a percentage of total assets. This technique allows for easy comparison of financial statements over different periods and among different companies, regardless of size. Vertical analysis helps identify relative proportions of various financial elements, highlighting structural changes and trends within the company’s financial performance.