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 income tax expense?
A) Vertical analysis would report a $7,500 increase income tax expense.
B) Vertical analysis would report income tax expense as 4.93% of net sales revenue.
C) Vertical analysis would report a 45.45% increase in income tax expense.
D) Vertical analysis would report income tax expense as 27.59% of net income before income tax.

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 income tax expense?
A) Vertical analysis would report a $7,500 increase income tax expense. 
B) Vertical analysis would report income tax expense as 4.93% of net sales revenue. 
C) Vertical analysis would report a 45.45% increase in income tax expense. 
D) Vertical analysis would report income tax expense as 27.59% of net income before income tax.

Quizplus · Accepted Answer

Vertical analysis expresses each item in a financial statement as a percentage of a base amount, such as net sales revenue.

The Following Is a Summary of Information Presented on the Income