The vertical analysis statement of Nobell Inc. is as below: The figure 47.0% shown for gross profit in 2016 signifies that:
A)gross profit is equal to 47.0% of net income.
B)gross profit is increased by 47.0% over the previous year.
C)gross profit is 47.0% of net sales revenue.
D)gross profit is 47.0% of cost of goods sold.

Question

The vertical analysis statement of Nobell Inc. is as below:  The figure 47.0% shown for gross profit in 2016 signifies that:
A)gross profit is equal to 47.0% of net income. 
B)gross profit is increased by 47.0% over the previous year. 
C)gross profit is 47.0% of net sales revenue. 
D)gross profit is 47.0% of cost of goods sold.

Quizplus · Accepted Answer

Vertical analysis expresses each item in a financial statement as a percentage of a base amount. In this case, the base amount is net sales revenue. Therefore, the figure 47.0% for gross profit signifies that gross profit is 47.0% of net sales revenue.

The Vertical Analysis Statement of Nobell Inc