Taylor Company reported the following information for the current year:

What would a vertical analysis report with respect to current year income tax expense?

Question

Taylor Company reported the following information for the current year:

What would a vertical analysis report with respect to current year income tax expense?

Quizplus · Accepted Answer

A vertical analysis report expresses each item in a financial statement as a percentage of a base amount. For income tax expense, the base amount is the company's net sales revenue. Therefore, the $107,400 income tax expense divided by the $5,365,500 net sales revenue results in a percentage of 2.00%. None of the other options accurately reflect the information provided for the income tax expense.

Taylor Company Reported the Following Information for the Current Year