Involves making comparisons between different items on a single financial statement for a single business in any given year. It involves the analyst reading down the page to compare figures on different lines and calculating component percentages. For example, vertical analysis of items on a balance sheet enables potential and existing lenders to assess a business’s: liquidity / solvency position, ie whether it is likely to be able to meet debts as they fall due. This information is obtained by examining the value of a business’s current liabilities in relation to its current assets; gearing position, ie the extent to which the total capital employed by a business is borrowed money. This information is obtained by dividing the capital employed in the business (debt and equity) with the value of any loans held.