If Shore Legal Supply's net sales increased from $40,000 to $80,000 and its operating expenses increased from $30,000 to $50,000,the vertical analysis based on net sales would show the following for operating expenses for the two periods (to the nearest tenth of a percent):
A)75.0% and 62.5%.
B)62.5% and 75.0%.
C)133.3% and 160.0%.
D)160.0% and 133.3%.

Question

Quizplus · Accepted Answer

Vertical analysis expresses each item in a financial statement as a percentage of a base amount. For operating expenses, the percentages are calculated as follows:  - For the first period: ($30,000 / $40,000) * 100 = 75.0%  - For the second period: ($50,000 / $80,000) * 100 = 62.5%

If Shore Legal Supply's Net Sales Increased from $40,000 to $80,000