When using vertical analysis,we express income statement accounts as a percentage of
A)Net income.
B)Gross profit.
C)Sales.
D)Total assets.

Question

Quizplus · Accepted Answer

When using vertical analysis, we express income statement accounts as a percentage of sales. This is because sales are the top line of the income statement and provide a common base for comparison of all other items on the statement. By expressing each item as a percentage of sales, we can easily see the relative size and importance of each item in relation to the overall revenue generated by the company.

When Using Vertical Analysis,we Express Income Statement Accounts as a Percentage