In the vertical analysis of an income statement, _____________ is assigned 100 percent, with all other items expressed as a percentage thereof.
A) Gross sales
B) Net sales
C) Net income
D) Gross margin

Question

Quizplus · Accepted Answer

In the vertical analysis of an income statement, Net sales is assigned 100 percent, with all other items expressed as a percentage thereof. This is because net sales represent the total revenues earned by a company during a given period, and all other items on the income statement are either expenses or profits that are derived from those revenues. By expressing these items as a percentage of net sales, investors and analysts can get a better sense of how efficiently a company is generating profits from its sales.

In the Vertical Analysis of an Income Statement, _____________ Is