Reimer Company reports the following data: 2017 2016 100% 100% 21% 11% 79% 89% 3

Question

Reimer Company reports the following data: 2017 2016 100% 100% 21% 11% 79% 89% 35% 54% Sales Cost of Goods Sold Gross Profit Operating Expenses Net Income 35% 44% When evaluating the results of operations, what can be said about Reimer Company? O A. Using horizontal analysis, the company's profitability declined in 2016. O B. Using horizontal analysis, the company's profitability declined in 2017. OC. Using vertical analysis, the company's profitability declined in 2017. O p. Using vertical analysis, the company's profitability declined in 2016. Click to select your answer. Type here to search

Explanation / Answer

Option C is the answer

Vertical analysis means each line item of financial statement is taken as percentage of one base figure. Gross sales is the base figure for Income statement. It is clearly evident from the pic that Sales are taken as base figure (100%) and the other other line items are expressed as a percentage of Sales. And the net income percentage declined in 2017 compared to 2016.

Using vertical analysis, the company's profitability declined in 2017

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