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Vertical Analysis Refers to Comparing the Financial Statements of a Single

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Vertical analysis refers to comparing the financial statements of a single company over several years.


Definitions:

Negative Net Present Value

An indication that the projected earnings (discounted back to present value) of an investment will be less than the initial investment cost.

Competitor's Cost

The expenses incurred by industry rivals, which can influence competitive pricing strategies.

Required Return

The smallest annual percent yield necessary to convince people or corporations to allocate funds towards a certain security or project.

WACC

Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionately weighted, used to determine the rate of return a company must earn on its existing assets to satisfy its creditors, owners, and other providers of capital.

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