Question
What is vertical analysis of financial statements?
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Answer
Vertical Analysis: In such type of analysis, financial statements for a single year or on a particular date are reviewed and analysed with the help of proper devices like ratios It involes a study quantitative amongs various items of Balance Sheet or Statement of Profit & Loss of a single period. The items in the financial statement are expressed as a percentage to total and the total is taken as equivalent to 100. Statements containing such analysis are termed as 'Common Size Statements'.
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