Bloom's Garden Center Company
Selected data from the financial statements of Bloom's Garden Center are provided below.

-Refer to the selected data provided for Bloom's Garden Center. Which of the following would result from a vertical analysis of Bloom's income statement?

Question

Bloom's Garden Center Company 
Selected data from the financial statements of Bloom's Garden Center are provided below.

-Refer to the selected data provided for Bloom's Garden Center. Which of the following would result from a vertical analysis of Bloom's income statement?

Quizplus · Accepted Answer

A vertical analysis of an income statement involves expressing each item as a percentage of net sales. Therefore, the result of a vertical analysis would be a percentage breakdown of each income statement item compared to the net sales. Option A, accounts receivable turnover ratio, is not an income statement item and cannot be analyzed through a vertical analysis of an income statement. Option C, the increase in cost of goods sold, is a dollar amount and cannot be expressed as a percentage without additional information. Option D, net sales as a percentage of total assets, is a measure of asset turnover and is not relevant to a vertical analysis of an income statement. Therefore, the only relevant option is B, as gross profit as a percentage of net sales would be a result of a vertical analysis of an income statement.