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

The figure 47.0% shown for gross profit in 2016 signifies that gross profit is 47.0% of net sales revenue. This is because, in vertical analysis, each item is expressed as a percentage of a common base amount, which is usually net sales.

The Vertical Analysis Statement of Nobell Inc