Saira, Inc. has the following income statement (in millions): Using vertical analysis, what percentage is assigned to Cost of Goods Sold?

Question

Saira, Inc. has the following income statement (in millions):  Using vertical analysis, what percentage is assigned to Cost of Goods Sold?

Quizplus · Accepted Answer

To perform vertical analysis, we take each item on the income statement as a percentage of net sales. Therefore, Cost of Goods Sold would be calculated as follows:
Cost of Goods Sold / Net Sales = ($1,200,000 / $2,000,000) = 0.60 = 60%
Therefore, the correct answer is B) 60%.