Olivera Company provides the following data for the year 2013:
$$\begin{array} { l r }
\text { Net sales revenue } & \$ 398,000 \
\text { Cost of goods sold } & \$ 255,000 \
\text { Operating expenses } & \$ 95,000 \
\text { Income tax expense } & \$ 9,000
\end{array}$$
-
On a vertical analysis, what percentage would be shown for operating expenses?
A) 22.9%
B) 66.4%
C) 23.9%
D) 24.5%

Question

Olivera Company provides the following data for the year 2013:
$$\begin{array} { l r } 
\text { Net sales revenue } & \$ 398,000 \
\text { Cost of goods sold } & \$ 255,000 \
\text { Operating expenses } & \$ 95,000 \
\text { Income tax expense } & \$ 9,000
\end{array}$$
-
On a vertical analysis, what percentage would be shown for operating expenses?
A) 22.9%
B) 66.4%
C) 23.9%
D) 24.5%

Quizplus · Accepted Answer

Vertical analysis of an income statement involves expressing each item within the statement as a percentage of sales revenue. To find the percentage for operating expenses, divide the operating expenses by net sales revenue and multiply by 100: $\frac{95,000}{398,000} \times 100 = 23.9\%$.

Olivera Company Provides the Following Data for the Year 2013