{"id":40337,"date":"2025-10-14T13:55:56","date_gmt":"2025-10-14T13:55:56","guid":{"rendered":"https:\/\/certifeka-edu.com\/programs\/finance-for-strategic-managers-accounting-professional-certificate-2\/lessons\/lesson-9-vertical-analysis-2\/"},"modified":"2025-10-14T13:55:56","modified_gmt":"2025-10-14T13:55:56","slug":"lesson-9-vertical-analysis-2","status":"publish","type":"lesson","link":"https:\/\/certifeka-edu.com\/ar\/programs\/sample-course\/lessons\/lesson-9-vertical-analysis-2\/","title":{"rendered":"Lesson 9: Vertical Analysis"},"content":{"rendered":"

\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

Lesson 9: Financial Statement Analysis
\n<\/h2>\n

Vertical Analysis<\/h3>\n

Also called common-size analysis, is a technique that expresses each financial statement item as a percentage of a base amount Example:<\/h5>\n
On a balance sheet, we might say that current assets are 22% of total assets—total assets being the base amount.<\/h5>\n
On an income statement, we might say that selling expenses are 16% of net sales—net sales being the base amount.<\/h5>\n
Vertical analysis shows the relative size of each category in the balance sheet.<\/h5>\n
It also can show the percentage change in the individual asset, liability, and stockholders’ equity items<\/h5>\n
The below illustration presents the vertical analysis of Quality Department Store Inc.’s comparative balance sheets.<\/h5>\n
The base for the asset items is total assets<\/h5>\n
The base for the liability and stockholders’ equity items is total liabilities and stockholders’ equity.<\/h5>\n

BALANCE SHEET<\/h3>\n

\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

Income statement<\/h3>\n

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If we assume that 2011 is the base year, we can measure all percentage increases or decreases from this base period amount as follows.<\/h5>\n
For example, we can determine that net sales for Macy’s increased from 2011 to 2012 approximately 4.9% [($27,686 – $26,405) \/ $26,405].<\/h5>\n
Similarly, we can determine that net sales increased from 2011 to 2013 approximately 5.8% [($27,931 – $26,405) \/ $26,405].<\/h5>\n
Alternatively, we can express current year sales as a percentage of the base period.<\/h5>\n
We do this by dividing the current year amount by the base year amount, as shown below.<\/h5>\n
To further illustrate horizontal analysis, we will use the financial statements of Quality Department Store Inc., a fictional retailer.<\/h5>\n

Vertical analysis
\n advantage & disadvantage
\n<\/h3>\n
\n\n\t\t\t\t\t Advantage :
\n\t\t\t<\/path><\/svg>
\n\t\t\t<\/path><\/svg>
\n\t\t\t\t\t\t<\/summary>\n

\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

It enables you to compare companies of different sizes<\/h5>\n
For example, we can compare the condensed income statements a small retail company with a giant international retailer reflected below<\/h5>\n<\/details>\n
\n\n\t\t\t\t\t Disadvantage:
\n\t\t\t<\/path><\/svg>
\n\t\t\t<\/path><\/svg>
\n\t\t\t\t\t\t<\/summary>\n<\/details>\n

\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

It enables you to compare companies of different sizes<\/h5>\n
For example, we can compare the condensed income statements a small retail company with a giant international retailer reflected below<\/h5>\n","protected":false},"comment_status":"open","ping_status":"closed","template":"","class_list":["post-40337","lesson","type-lesson","status-publish","hentry"],"yoast_head":"\nLesson 9: Vertical Analysis - Certifeka-edu<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/certifeka-edu.com\/ar\/programs\/sample-course\/lessons\/lesson-9-vertical-analysis-2\/\" \/>\n<meta property=\"og:locale\" content=\"ar_AR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lesson 9: Vertical Analysis - Certifeka-edu\" \/>\n<meta property=\"og:description\" content=\"Lesson 9: Financial Statement Analysis Vertical Analysis Also called common-size analysis, is a technique that expresses each financial statement item as a percentage of a base amount Example: On a balance sheet, we might say that current assets are 22% of total assets—total assets being the base amount. 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