In vertical analysis, each item is expressed as a percentage of:
A)Net sales on the income statement.
B)Net income on the income statement.
C)Total expenses on the income statement.
D)None of the other answers are correct.

Question

Quizplus · Accepted Answer

When performing vertical analysis on an income statement, each item on the income statement is divided by sales. All items are presented as a percentage of sales. When performing vertical analysis on the balance sheet, each item on the balance sheet is divided by total assets. All items are presented as a percentage of total assets.

In Vertical Analysis, Each Item Is Expressed as a Percentage