On a common-size income statement,net income should be stated as a percentage of:
A)gross margin.
B)total assets.
C)net sales.
D)current assets.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

Net income is commonly stated as a percentage of net sales in a common-size income statement. This allows for easy comparison of profitability metrics between companies of different sizes and industries. Gross margin and current assets are not relevant in determining net income as a percentage. Total assets are not directly related to net income and may not be a consistent measure across different industries.

On a Common-Size Income Statement,net Income Should Be Stated as a Percentage