The Following Chart Shows Some Figures from an Income Statement

question 2

Multiple Choice

The following chart shows some figures from an income statement. Prepare a vertical analysis by expressing each item as a percent of net sales. Round percents to the nearest tenth of a percent.
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• A)65.5%, 11.3%, 5.6%, 15.5%
• B)65.5%, 17.2%, 8.5%, 23.6%
• C)65.5%, 11.5%, 8.5%, 23.6%
• D)65.5%, 11.3%, 49.2%, 15.5%

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Definitions:

M&M Proposition I

A principle of financial theory stating that under perfect market conditions, the value of a firm is unaffected by how it is financed.

Liquidation

The process of converting assets into cash or cash equivalents by selling them in the market.

Going Concern

An accounting assumption that a company will continue to operate for the foreseeable future, thus justifying the presence of its assets and liabilities.

Financial Restructuring

The process of reorganizing a company's financial structure, often involving re-negotiation of debts and equity, to improve its liquidity and ensure its survival.