alleryIn a vertical analysis of an income statement, each line item is expressed as a percentage of which figure?
ATotal assets
BNet income
CSales
DGross profit
Answer & Solution
Correct answer: C. Sales
1. Vertical analysis reports each line item as a percentage of a base total.
2. On the income statement the base is sales, the largest value.
3. Total assets is the base used on the balance sheet, not the income statement.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.3.2 "Vertical Analysis", p.290_
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