The vertical analysis of the income statement of Bates, Inc. is as shown below: The figure 47.0% shown for gross profit in 2019 signifies that the gross profit is ________.
A) equal to 47.0% of net income
B) increased by 47.0% over the previous year
C) 47.0% of net sales revenue
D) 47.0% of cost of goods sold

Question

The vertical analysis of the income statement of Bates, Inc. is as shown below:  The figure 47.0% shown for gross profit in 2019 signifies that the gross profit is ________.
A) equal to 47.0% of net income 
B) increased by 47.0% over the previous year 
C) 47.0% of net sales revenue 
D) 47.0% of cost of goods sold

Quizplus · Accepted Answer

The vertical analysis expresses each item on an income statement as a percentage of net sales revenue. Therefore, the figure 47.0% shown for gross profit in 2019 signifies that the gross profit is 47.0% of net sales revenue.

The Vertical Analysis of the Income Statement of Bates, Inc