7/31/2019 Caclubindia News _ Types of Financial Analysis

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7/31/2019 Caclubindia News _ Types of Financial Analysis

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(b) Vertical Analysis:

When the analysis is restricted to the financial statements of one particular period only, it is known as vertical

analysis of financial statements. In this analysis each item of a particular financial statement is expressed as

percentage of a base figure selected from the same statement. It is also known as Static Analysis as it

concentrates solely on one years financial statement. Common-size statements and accounting ratios are two

important tools used for vertical analysis. This analysis is very much useful for understanding the structural

relationship of various items in a financial statement. Vertical analysis can also be done for studying therelationship within a set of financial statements at a point of time.

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