Question

Vertical Analysis Income statement information for Einsworth Corporation follows: Sales$564,000 Cost of goods sold135,360 Gross profit428,640...

Vertical Analysis

Income statement information for Einsworth Corporation follows:

Sales$564,000

Cost of goods sold135,360

Gross profit428,640

Prepare a vertical analysis of the income statement for Einsworth Corporation. If required, round percentage answers to the nearest whole number.

Einsworth Corporation

Vertical Analysis of the Income Statement

AmountPercentage

Sales$564,000%

Cost of goods sold135,360

Gross profit$428,640%

Business   Accounting   
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Answer #1

Answer :

Vertical analysis of Income statement,  is a analysis of Income statement in which each line item is shown as a percentage of sales. Sales percentage is always 100%.

Vertical Analysis of the Income Statement :

Particulars Amount (in $) Percentage
Sales 564,000 100%
Less : Cost of goods sold 135,360 24%
Gross profit 428,640 76%

% Cost of goods sold = $135,360 / $564,000 x 100 = 24%

% Gross profit = $428,640 / $564,000 x 100 = 76%

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