Vertical Analysis 2020 2019 2018 Sales revenue 100.0% 100.0% 100.0% Cost of goods sold 60.0 63.9 65.0 Expenses 26.0 26.6 27.5
Vertical Analysis 2020 2019 2018 Sales revenue 100.0% 100.0% 100.0% Cost of goods sold 60.0 63.9 65.0 Expenses 26.0 26.6 27.5
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Vertical analysis (common-size) percentages for Baker Company’s sales revenue, cost of goods sold, and expenses are as follows. Did Baker’s net income as a percent of sales increase, decrease, or remain unchanged over the 3-year period? Provide numerical support for your answer.
|
Vertical Analysis |
2020 |
2019 |
2018 |
|
Sales revenue |
100.0% |
100.0% |
100.0% |
|
Cost of goods sold |
60.0 |
63.9 |
65.0 |
|
Expenses |
26.0 |
26.6 |
27.5 |
Expert Solution
Step 1
Net income= Sales revenue- cost of good sold-expense.
| 2020 | 2019 | 2018 | |
| Sales | 100% | 100% | 100% |
| Less COGS | 60% | 63.9% | 65% |
| Less Expenses | 26% | 26.6% | 27.5% |
| Net Income | 14.00% | 9.50% | 7.50% |
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