vertical analysis

  

Definition

Technique for identifying relationship between items in the same financial statement by expressing all amounts as the percentage of the total amount taken as 100. In a balance sheet, for example, cash and other assets are shown as a percentage of the total assets and, in an income statement, each expense is shown as a percentage of the sales revenue. Financial statements using this technique are called common size financial statements. See also horizontal analysis.

Use vertical analysis in a sentence

  • Our vertical analysis was in and when I looked at it I had no idea what it meant and what I was to do with it.

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  • You may want to try and do a vertical analysis to figure out if there are new ways to progress your business.

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  • The vertical analysis allowed for a more homogeneous and easy to read version of the financial statements which was a great relief for the reader.

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