Using Vertical Analysis of the Income Statement, a Company's Net

question 93

True/False

Using vertical analysis of the income statement, a company's net income as a percentage of sales is 15%; therefore, the cost of goods sold as a percentage of sales must be 85%.

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Definitions:

Break-even Analysis

A financial calculation to determine the point at which revenue received equals the costs associated with receiving the revenue, indicating no net loss or gain.

Fixed Cost

Expenses that do not change with the amount of goods or services produced, such as rent, salaries, and insurance premiums.

Variable Cost

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production output.

Internet Software Product

A software application or tool that is accessed and used through an internet connection, often delivered as a service (SaaS).