Comparing each item in a financial statement with a total amount from the same statement is useful in analyzing relationships within the financial statement. Vertical Analysis is the term used to describe such comparisons.

In vertical analysis of a balance sheet, each asset item is stated as a percent of the total assets. Each liability and stockholders equity item is stated as a percent of total liabilities and stockholders equity. In vertical analysis of an income statement, each item is stated as a percent of revenues or fees earned.

Vertical analysis is also useful for analyzing changes in financial statements over time.

Choose a company that has their Balance Sheet available online and make a vertical analysis comparison. If you have already chosen a company to do your annual report project on then use their financial statements (Amazon). Make sure you analyze at least five different accounts by providing a 2-3 sentence explanation of each of the five comparisons as well as providing the link to the webpage where you found your financial statement.