Vertical Analysis is a financial analysis method that expresses each item in a financial statement as a percentage of a base figure. For example, in an income statement, each line item is shown as a percentage of total revenue, allowing for easy comparison across different periods or companies. This method helps identify trends and the relative size of various components. In balance sheets, vertical analysis shows each asset, liability, and equity item as a percentage of total assets. This approach aids in assessing the financial structure and stability of a company, making it easier for stakeholders to understand the composition of its finances.