Balance Sheet Vertical Analysis
Description: This comparative balance sheet template is setup to reflect a two year period along with a vertical analysis of each year. The vertical analysis is based on total assets – the most common denominator used in a vertical analysis of the balance sheet. The purpose of a vertical analysis is to perform a proportional analysis of each individual line item relative another line item. One way to add additional insight to such an analysis is to evaluate the proportions of each balance sheet line item over time in order to identify trends, outliers, or potential errors. The balance sheet provided here is a template that has been constructed with common line items included within each balance sheet component (i.e., current assets, current liabilities, long-term, equity, etc); items can be added or removed as needed. When rows are added or deleted, the dynamic summations should automatically update to include all items within an individual section of the balance sheet regardless of where the item was added or removed. As an additional check, we've added a "check figure" to the bottom of the template that will identify whether the balance sheet balances appropriately. We've also included notes on certain line items in order to provide additional information for that line.
Download a vertical analysis income statement here.
More Information on the Balance Sheet
The Balance Sheet, also known as the statement of financial position, reflects the assets, liabilities, and equity of an entity. Commonly used to evaluate Working Capital – business owners and/or investors often spend substantial time analyzing the balance sheet as many performance measures including the overall financial stability of an entity can be evaluated using this statement.
The easiest way to understand a balance sheet is to understand that:
Current Assets – Generally speaking, a period of 1 year is used to determine the classification of an asset as current. Deviation is permitted if the entities operating cycle is greater than 1 year; however, if the operating cycle is not clear use 1 year.
Current Liabilities – As with Current Assets, the 1 year time period is used. Items included within current liabilities are amounts known or estimated that will require expenditure to satisfy such obligations.
Long-term – Assets and liabilities not meeting the definition of current should be reflected as long-term (i.e., outside of the current classification).
Features Included in this Template This balance sheet template includes the following features designed to increase efficiency and enhance professionalism:
Note, this template is setup as an example. The facts and circumstances surrounding individual transactions will dictate how and where those transactions are classified.
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* Note, utilizing the features of this excel template requires Microsoft Excel® 2007 or later - some of the attributes such as the shading, formulas, and other formatting are not compatible with earlier versions.