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Vertical Analysis Formula (Examples) | How to Calculate it? [Video]

Vertical Analysis Formula (Examples) | How to Calculate it?

In this video on Vertical Analysis Formula, here we discuss how to do vertical analysis of financial statements (Balance Sheet, Income Statement) using its formula along with an example.

๐–๐ก๐š๐ญ ๐ข๐ฌ ๐•๐ž๐ซ๐ญ๐ข๐œ๐š๐ฅ ๐€๐ง๐š๐ฅ๐ฒ๐ฌ๐ข๐ฌ ๐…๐จ๐ซ๐ฆ๐ฎ๐ฅ๐š?
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Vertical analysis is a kind of analysis of the financial statements in which each item in the financial statement is shown in percentage of the base figure

๐…๐จ๐ซ๐ฆ๐ฎ๐ฅ๐š
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Vertical Analysis Formula = Individual Item / Base Amount *100

๐€๐๐ฏ๐š๐ง๐ญ๐š๐ ๐ž๐ฌ ๐จ๐Ÿ ๐•๐ž๐ซ๐ญ๐ข๐œ๐š๐ฅ ๐€๐ง๐š๐ฅ๐ฒ๐ฌ๐ข๐ฌ ๐…๐จ๐ซ๐ฆ๐ฎ๐ฅ๐š
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#1 – Provides a comparable figure that can be used in comparison with past years.

#2 – Helps to explain percentage / share of of the individual items.

๐ƒ๐ข๐ฌ๐š๐๐ฏ๐š๐ง๐ญ๐š๐ ๐ž๐ฌ ๐จ๐Ÿ ๐•๐ž๐ซ๐ญ๐ข๐œ๐š๐ฅ ๐€๐ง๐š๐ฅ๐ฒ๐ฌ๐ข๐ฌ ๐…๐จ๐ซ๐ฆ๐ฎ๐ฅ๐š
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#1 – Quality analysis is not performed by using vertical analysis of financial statements.

#2 – Organizational liquidity cannot be measured exactly by using the analysis.

To know more about the ๐•๐ž๐ซ๐ญ๐ข๐œ๐š๐ฅ ๐€๐ง๐š๐ฅ๐ฒ๐ฌ๐ข๐ฌ ๐…๐จ๐ซ๐ฆ๐ฎ๐ฅ๐š, you can go to this ๐ฅ๐ข๐ง๐ค ๐ก๐ž๐ซ๐ž:- https://www.wallstreetmojo.com/vertical-analysis-formula/

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