Question

Does the diff degree of vertical coordination affect the benchmark of the financial ratio?

Answer 1

Vertical analysis is method of financial statement analysis in which each line item is listed as a percentage of a base figure within the statement. Thus, line items on an income statement can be stated as a percentage of gross sales while line items on a balance sheet can be stated as a percentage of tatal assets or liabilities, and vertical analysis of a cash flow statement shows each cash inflows as a percentage of the total cash inflows.

Vertical analysis makes it easier to understand the correlation between single items on balance sheet and the bottom line, expenses in a percentag

Vertical analysis can become a more petent tool when used in conjunction with horizontal analysis, which considers the finances of a certain period of time.