Analysis of Financial Statements by Vertical Analysis Method: An Application in BIST Tourism Sector (2019)

Abstract

Financial statements are the tools that enable the information recorded in the accounting system to be prepared in a complete, consistent, clear, and understandable way and to be conveyed to the persons related to the business. While the financial statements published by the companies in certain periods allow the comparison and analysis of the data from the current period and the past period, on the other hand, they perform the function of “Reporting and Analysis” which is one of the important functions of accounting. The data of 9 companies were included in the research, and after determining the proportional distribution of the items in the balance sheet and income statement, the companies were interpreted by comparing each other with the company averages. One of these analysis techniques is the "Vertical Analysis Method". Vertical analysis method is a method that is used to express the data in balance sheet and income table, which are the basic financial statements of accounting, in percentage terms. In vertical analysis method, expressing financial statements in percentage instead of absolute values provides great convenience to users of financial statements. The aim of the study is analyzing and interpreting the financial statements of the companies operating in the tourism sector, registered in Borsa Istanbul, using the data of 2019 by analyzing them with the "Vertical Analysis Method". In the study, it was concluded that the majority of the companies operating in the tourism sector were profitable in 2019 despite being influenced by the negative developments experienced in the past period and enduring high costs. Additionally, it is concluded that the current assets of companies are not similar to each other, they point a fixed asset-weighted appearance, which is the general feature of the tourism sector, and that companies are financed by equity rather than foreign resources. In addition, it has been determined that the companies included in the analysis bear high costs and trade payables and receivables have an important place in the financial statements.