Selected Financial Data from Osterville Company for the Most Recent

question 58

Multiple Choice

Selected financial data from Osterville Company for the most recent year appear below: The income tax rate is 40%.
-Net income as a percentage of sales was:

• A)5%
• B)3%
• C)2.25%
• D)1.75%

---

Definitions:

Current Ratio

A measure used to evaluate a company’s liquidity and short-term debt-paying ability; computed by dividing current assets by current liabilities.

Vertical Analysis

A financial statement analysis method where each entry for each category is listed as a percentage of a base figure within the statement.

Horizontal Analysis

A financial analysis technique that compares line items in financial statements over different periods to identify trends.

Horizontal Analysis

Horizontal analysis is a financial analysis technique that compares historical financial data over a series of periods.