Respuesta :
When using vertical analysis, we express balance sheet accounts as a percentage of total assets.
What Is Vertical Analysis?
As part of a method known as vertical analysis for financial statement analysis, each line item is given as a percentage of a base figure in the statement. As a result, line items on an income statement and balance sheet can both be expressed as a percentage of gross sales, a percentage of all assets or liabilities, and, correspondingly, a percentage of all assets or liabilities. Each cash intake or outflow is shown as a proportion of total cash inflows in a cash flow statement when it is analyzed vertically.
How is vertical analysis carried out?
Comparing financial accounts between companies and across industries is made considerably simpler by vertical analysis. This is due to the fact that account balance ratios are visible. Additionally, it facilitates the comparison of prior periods for time series analysis, which compares quarterly and annual numbers over a period of years to see whether performance indicators are increasing or declining.
Learn more about total assets or liabilities with the help of the given link:
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