While calculating vertical analysis on income statement, net sales is always the denominator.
One of the three crucial financial statements used to describe a company's financial performance throughout a certain accounting period is the income statement. The balance sheet and the cash flow statement are the other two important statements. Through income statement the management of a company is able to analyze its earnings and expenditures.
The revenue, costs, gains, and losses suffered by a company over a specific period of time are the key themes of the income statement. An income statement, also referred to as the profits and losses (P&L) statement, income and expenses, offers important information about a firm's operations, the effectiveness of its management, poorly performing industries, and its performance when compared to peers within the same industry.
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