Using vertical analysis of the income statement, a company's net income as a percentage of net sales is 10%; therefore, the cost of goods sold as a percentage of net sales must be 90%.

Question

Quizplus · Accepted Answer

This statement is not necessarily true. There are other expenses (such as operating expenses) that could also affect the net income as a percentage of net sales. Therefore, the cost of goods sold as a percentage of net sales may not be exactly 90%.

Using Vertical Analysis of the Income Statement, a Company's Net