Saira Inc. has the following income statement (in millions): $\begin{array}{c}
\text {SAIRA, INC}\
\text {Income Statement}\
\text { For the Year Ended December 31,2017}\
\begin{array}{lr}
\text { Net Sales } & \$ 300 \
\text { Cost of Goods Sold } & 180 \
\text { Gross Profit } & 120 \
\text { Operating Expenses } & 45 \
\text { Net Income } & \$ 75
\end{array}\end{array}$ Using vertical analysis what percentage is assigned to Net Income?

Question

Saira Inc. has the following income statement (in millions): $\begin{array}{c}
\text {SAIRA, INC}\
 \text {Income Statement}\
\text { For the Year Ended December 31,2017}\
\begin{array}{lr}
\text { Net Sales } & \$ 300 \
\text { Cost of Goods Sold } & 180 \
\text { Gross Profit } & 120 \
\text { Operating Expenses } & 45 \
\text { Net Income } & \$ 75
\end{array}\end{array}$ Using vertical analysis what percentage is assigned to Net Income?

Quizplus · Accepted Answer

To find the percentage assigned to Net Income using vertical analysis, we divide Net Income by Total Revenue and then multiply by 100. Net Income is $20,000,000 and Total Revenue is $80,000,000 (both in millions). Therefore, (20,000,000 / 80,000,000) x 100 = 25%. Thus, the correct answer is C.

Saira Inc Has the Following Income Statement (In Millions) Using Vertical Analysis What Percentage Is Assigned to Net Income