Income statement information for Sadie Company is below: Using vertical analysis of the income statement for Sadie Company, determine the gross profit margin.
A) 100%
B) 66%
C) 34%
D) 29%

Question

Income statement information for Sadie Company is below:  Using vertical analysis of the income statement for Sadie Company, determine the gross profit margin.
A) 100% 
B) 66% 
C) 34% 
D) 29%

Quizplus · Accepted Answer

To calculate the gross profit margin using vertical analysis, we divide gross profit by total revenue and then multiply by 100 to get a percentage. 
Gross Profit = $120,000 
Total Revenue = $350,000 
Gross Profit Margin = (Gross Profit/Total Revenue) x 100 
= ($120,000/$350,000) x 100 
= 34%

Therefore, the correct answer is C - 34%.

Income Statement Information for Sadie Company Is Below: Using