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 need to divide the gross profit by the total revenue and express it as a percentage.

Gross profit = Net sales - Cost of goods sold
= $250,000 - $165,000
= $85,000

Total revenue = Net sales
= $250,000

Gross profit margin = (Gross profit/Total revenue) x 100%
= ($85,000/$250,000) x 100%
= 34%

Therefore, the correct choice is C, as the gross profit margin for Sadie Company is 34%.

Income Statement Information for Sadie Company Is Below: Using