Análisis Vertical de Estados Financieros | FINANZAS

How to Perform Vertical Financial Statement Analysis

Introduction to Vertical Analysis

• The video series continues with a focus on vertical analysis of financial statements, following a previous discussion on horizontal analysis.

• Vertical analysis helps determine the percentage weight of each account in financial statements compared to a base amount representing 100%.

Purpose and Base Figures

• For the balance sheet, the base figure is the total assets, while for liabilities and equity, it is the sum of both.

• In income statements, net sales serve as the base figure (100%) for comparison with other accounts.

Calculation Process

• Unlike horizontal analysis which requires two periods for variance calculations, vertical analysis can be performed using data from a single period.

• The calculation involves dividing each asset account by total assets and multiplying by 100 to find percentages.

Example Calculations for 2023

• For example, cash represents approximately 9.8% of total assets when calculated against a total asset value of 1,200,000.

• Similar calculations are applied to liabilities and equity using their respective totals as bases.

Transitioning to Year 2024

• The same formulas are used for year 2024's calculations to maintain consistency and save time in Excel.

Interpretation of Results

Balance Sheet Insights

• Focusing on year 2024 reveals that non-current assets constitute 73.5% of total assets while current assets only make up 26.5%.

• This indicates significant investment in property and equipment but raises concerns due to declining profitability observed in prior analyses.

Comparison with Previous Year (2023)

• In contrast, year 2023 showed current assets at 42.2%, indicating a shift towards more long-term investments over time.

Financial Analysis Overview: Insights from 2024 Data

Balance Sheet Analysis

• The balance sheet reveals that liabilities constitute nearly 60% of the total structure in the second half of 2024, while equity stands at 41.2%, indicating a significant concentration in debt.

• An increase in debt levels is noted compared to the previous year, where liabilities were at 47% and equity at 52.9%. This trend suggests a growing reliance on debt financing, which is concerning for financial health.

• The vertical analysis confirms that debts are increasingly dominating the balance sheet, highlighting potential risks associated with high leverage.

Income Statement Insights

• In 2024, sales represent 100% of revenue; however, cost of goods sold (COGS) accounts for a substantial 70%, raising concerns about pricing strategies and cost management.

• A notable increase of 5% in COGS indicates possible inefficiencies in raw material procurement or pricing policies that could adversely affect profitability.

• Gross profit margins are low at only 30%, with operating income dropping to 12.2% and net income falling to just 6.3%, suggesting inadequate profit generation relative to sales.

Comparative Performance Analysis

• Compared to the previous year (2023), there was an increase in COGS from representing 60% to now accounting for a higher percentage, negatively impacting overall profitability metrics.

• Operating expenses have also risen but not as drastically as COGS; thus, controlling these costs remains essential for improving net income margins.

Conclusions and Recommendations

• The excessive weight of COGS (70%) significantly hampers profit margins; immediate corrective actions are necessary to enhance financial performance.

• The asset composition shows an over-reliance on property, plant, and equipment without corresponding returns—indicating inefficiency in capital utilization.

• Urgent measures must be taken to address high debt levels relative to equity investments by owners and retained earnings; this imbalance poses long-term sustainability risks.

Final Thoughts on Financial Analysis Techniques

• Combining horizontal and vertical analyses provides deeper insights into financial performance trends and aids decision-making processes for better business management outcomes.

• Future examples will illustrate different scenarios since each case presents unique challenges requiring tailored analytical approaches.