Question #5659

In vertical analysis, the base amount for each income statement item is

net sales.

net income.

sales.

gross profit.

net sales.

net income.

sales.

gross profit.

Expert's answer

In vertical analysis the base amount for each income statement item is net

sales. In each column of income statement the net sales figure is used as 100

percent. Every amount in the column is expressed as a percentage of net sales.

To compute an item’s percentage of net sales, the amount of that item should be

divided by the amount of net sales.

sales. In each column of income statement the net sales figure is used as 100

percent. Every amount in the column is expressed as a percentage of net sales.

To compute an item’s percentage of net sales, the amount of that item should be

divided by the amount of net sales.

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