The following is a summary of information presented on the income statement of HR Flowers for December 31, 2007.

- What would vertical analysis report with respect to 2007 selling and general expenses?
A) Vertical analysis would report a 40.00% increase in selling and general expenses.
B) Vertical analysis would report a 40.00% decrease in selling and general expenses.
C) Vertical analysis would report selling and general expenses as 14.37% of net sales revenue.
D) Vertical analysis would report selling and general expenses as 10.00% of net sales revenue.

Question

The following is a summary of information presented on the income statement of HR Flowers for December 31, 2007.

- What would vertical analysis report with respect to 2007 selling and general expenses?
A) Vertical analysis would report a 40.00% increase in selling and general expenses. 
B) Vertical analysis would report a 40.00% decrease in selling and general expenses. 
C) Vertical analysis would report selling and general expenses as 14.37% of net sales revenue. 
D) Vertical analysis would report selling and general expenses as 10.00% of net sales revenue.

Quizplus · Accepted Answer

Vertical analysis reports each amount on a financial statement as a percentage of another item. For selling and general expenses, it would express these expenses as a percentage of net sales revenue, not as an increase or decrease in dollar amount or percentage from one period to another.

The Following Is a Summary of Information Presented on the Income