Assume you are using net sales as the base in vertical analysis. Cost of goods sold in 2013 is 67%, and is 70% in 2014. This would always indicate that:

Question

Quizplus · Accepted Answer

When cost of goods sold as a percentage of net sales increases, it means that a larger portion of the net sales is being used to cover the cost of producing the product or service. This is generally not a good sign as it implies reduced profitability.

Assume You Are Using Net Sales as the Base in Vertical