To see how costs are affecting net profit, try analyzing the income statement by expressing each ________.
A) as a percentage of costs
B) as a percentage of profit
C) as a percentage of sales
D) as a percentage of administrative expense

Question

Quizplus · Accepted Answer

Expressing each item on the income statement as a percentage of sales provides the most useful information for analyzing how costs are affecting net profit. This allows for comparison of each expense to overall revenue, giving insight into how much of each dollar earned is being eaten up by costs.

To See How Costs Are Affecting Net Profit, Try Analyzing