PE 17-2B Vertical analysis

Income statement information for Einsworth Corporation is provided below.

Sales $1,200,000

Cost of goods sold 780,000

Gross profit 420,000

Prepare a vertical analysis of the income statement for Einsworth Corporation.

Answer:

Amount Percentage 
Sales……………………………  $1,200,000 100% ($1,200,000 ÷ $1,200,000) 
Cost of goods sold……………   780,000   65% ($780,000 ÷ $1,200,000) 
Gross profit……………………… $   420,000   35% ($420,000 ÷ $1,200,000)