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Unformatted text preview: VERTICAL ANALYSIS Vertical analysis , also called common-size analysis, is a technique for evaluating financial statement data that expresses each item in a financial statement as a percent of a base amount . For example, on a balance sheet we might say that current assets are 22% of total assets (total assets being the base amount). Or on an income statement we might say that selling expenses are 16% of net sales (net sales being the base amount). Presented in Illustration 13-13 is the comparative balance sheet of Kellogg for 2007 and 2006, analyzed vertically. The base for the asset items is total assets , and the base for the liability and stockholders' equity items is total liabilities and stockholders' equity . Illustration 13-13 Vertical analysis of a balance sheet In addition to showing the relative size of each category on the balance sheet, vertical analysis may...
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- Spring '11