Using vertical analysis, what percentage is assigned to Cost of Goods Sold?

Question

Quizplus · Accepted Answer

Vertical analysis involves expressing all items in the financial statements as percentages of a common base amount. In this case, the common base amount is usually sales revenue. Cost of Goods Sold is an expense item that appears on the income statement and represents the direct costs incurred in producing the goods sold during the period. Therefore, it is a percentage of sales revenue. Based on the given information, we can conclude that 60% of the total expenses incurred during the period are attributed to Cost of Goods Sold.

Using Vertical Analysis, What Percentage Is Assigned to Cost of Goods