Using vertical analysis on the income statement, a company's net income as a percentage of net sales is 15%; therefore, the cost of goods sold as a percentage of net sales must be 85%.

Question

Quizplus · Accepted Answer

Vertical analysis shows each item as a percentage of net sales, but net income and cost of goods sold are not directly complementary percentages. Other expenses also affect net income.

Using Vertical Analysis on the Income Statement, a Company's Net