Vertical analysis is a method that is based on a percentage analysis of financial statements. It quantifies the percentage rate of the proportion of the whole. An example is the quantification of proportion of each asset in total assets, the proportion of each item of capital in total liabilities. It is appropriate to work with longer time series.
Vertical analysis method belongs to the Extensive (absolute) indicators analysis.
Use of the Vertical analysis method in practice: In an enterprise it is used by CFO (Chief Financial Officer) for the evaluation of the effectiveness of the investment. The method can be used for intercompany comparison (the same line of business).
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