If an Analyst Wishes to See How a Company's Net

question 131

True/False

If an analyst wishes to see how a company's net income as a percentage of net sales has changed from one year to the next,a vertical analysis would be the most appropriate approach.

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Definitions:

Equivalent Units

A concept in cost accounting used to equate units of production in various stages of completion to a number of fully completed units.

Direct Labour

This refers to the work done by employees who directly contribute to the manufacturing or production process of a company's goods or services.

Factory Overhead

All costs related to manufacturing that are not direct materials or direct labor expenses.

Direct Material

Raw materials that can be directly attributed to the production of a specific product.