In this tutorial, we will learn what is Vertical Analysis, its formulas and step-by-step calculations. Following that, we will perform vertical analysis of the Colgate Case Study and interpret the results.
What is Vertical Analysis?
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Vertical analysis is a financial statement analysis technique in which each item in the financial statement is represented as a percentage of the base figure.
Formula
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Vertical Analysis formula = Individual Item / Base Amount *100
Advantages of Performing Vertical Analysis
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• Vertical analysis is one of the most simple and direct methods of financial analysis.
• It yields a comparable percentage that can be compared to previous year’s percentages of the same organization.
• Because the comparison is made in percentages, it also helps to compare the financial statements of various organizations.
Link to Step by Step Financial Ratios Tutorials
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– Part 1 – Ratio Analysis:
https://www.youtube.com/watch?v=yPUb6PsVvLA&list=PLazLoBfxFADN9Qq8j8hghG9nvVBXl1V0y
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To know more about Vertical Analysis in Finance, you can go to this link:
https://www.wallstreetmojo.com/vertical-analysis-formula/
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