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Vertical Analysis
A vertical analysis allows management to identify areas on the financial statement that should be investigated by comparing results from the current period to those of previous periods.
What is a Vertical Analysis?
- Account value as a percentage of a base
- Income statement: base is sales
- Balance sheet: base is total assets or total liabilities and equity
- Identifies if certain account values have changed in a positive or negative way relative to base.
Vertical Analysis of an Income Statement
Vertical Analysis of a Balance Sheet
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Example: Vertical Analysis
Perfect a vertical analysis of the current assets section of the balance sheet.
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Example: Vertical Analysis
Using the income statement below, perform a vertical analysis for Operating Expenses.
Practice: Vertical Analysis
Perform a vertical analysis on Nike, Inc.'s income for the following lines: Revenue, Cost of Sales and Gross Profit
Enter your answers in percentage, rounded to 2 decimal places and omit the symbol. For example, 5.437% should be entered as 5.44.
| Account Title | % |
| Revenues | |
| Cost of sales | |
| Gross profit |
Practice: Vertical Analysis
Perform a vertical analysis on Nike, Inc.'s balance sheet for the following accounts: Inventories and Accounts Payable
Enter your answers in percentage, rounded to 2 decimal places and omit the symbol. For example, 5.437% should be entered as 5.44.
| Inventories | |
| Accounts Payable |