Vertical analysis of financial statements refers to the development of percentages indicating the proportionate changes in selected financial statements for two or more reporting periods.

Question

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Vertical analysis is a method where each entry for each of the three major categories of accounts (assets, liabilities, and equity) in a balance sheet is represented as a proportion of the total account. It's not about comparing changes over different periods but analyzing the structure of a single financial statement at a point in time.

Vertical Analysis of Financial Statements Refers to the Development of Percentages