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.
๐๐ก๐๐ญ ๐ข๐ฌ ๐๐๐ซ๐ญ๐ข๐๐๐ฅ ๐๐ง๐๐ฅ๐ฒ๐ฌ๐ข๐ฌ ๐
๐จ๐ซ๐ฆ๐ฎ๐ฅ๐?
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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
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Vertical Analysis Formula = Individual Item / Base Amount *100
๐๐๐ฏ๐๐ง๐ญ๐๐ ๐๐ฌ ๐จ๐ ๐๐๐ซ๐ญ๐ข๐๐๐ฅ ๐๐ง๐๐ฅ๐ฒ๐ฌ๐ข๐ฌ ๐
๐จ๐ซ๐ฆ๐ฎ๐ฅ๐
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#1 โ Provides a comparable figure that can be used in comparison with past years.
#2 โ Helps to explain percentage / share of of the individual items.
๐๐ข๐ฌ๐๐๐ฏ๐๐ง๐ญ๐๐ ๐๐ฌ ๐จ๐ ๐๐๐ซ๐ญ๐ข๐๐๐ฅ ๐๐ง๐๐ฅ๐ฒ๐ฌ๐ข๐ฌ ๐
๐จ๐ซ๐ฆ๐ฎ๐ฅ๐
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#1 โ Quality analysis is not performed by using vertical analysis of financial statements.
#2 โ Organizational liquidity cannot be measured exactly by using the analysis.
To know more about the ๐๐๐ซ๐ญ๐ข๐๐๐ฅ ๐๐ง๐๐ฅ๐ฒ๐ฌ๐ข๐ฌ ๐ ๐จ๐ซ๐ฆ๐ฎ๐ฅ๐, you can go to this ๐ฅ๐ข๐ง๐ค ๐ก๐๐ซ๐:- https://www.wallstreetmojo.com/vertical-analysis-formula/
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