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Answer: 12%
Under vertical common-size analysis, each income statement item is expressed as a percentage of revenue. Revenue is calculated as the sum of gross profit and cost of sales (100 + 150 = 250). Therefore, selling, general, and administrative expenses as a percentage of revenue is calculated as: \[ \frac{30}{250} = 12\% \] - **Option B (20%)** is incorrect because it calculates the expenses as a percentage of cost of sales (30 / 150). - **Option C (30%)** is incorrect because it calculates the expenses as a percentage of gross profit (30 / 100).
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An analyst gathers the following financial data (in $ millions) for a manufacturing company:
A
12%
B
20%
C
30%