Which of the following profitability ratios would be determined through a common size vertical analysis of the income statement?
A)gross profit percentage
B)return on assets
C)return on equity
D)earnings per share

Question

Quizplus · Accepted Answer

Gross profit percentage is a profitability ratio that measures the percentage of sales revenue that remains after deducting the cost of goods sold. A common size vertical analysis of the income statement presents each line item as a percentage of sales revenue, making it easy to calculate the gross profit percentage. Return on assets, return on equity, and earnings per share are not profitability ratios determined through a common size vertical analysis of the income statement.

Which of the Following Profitability Ratios Would Be Determined Through