Question

The calculations for some profitability ratios are the same as the calculations for common-size analysis of the income statement. Which of the following profitability ratios would also be determined through a common-size analysis of the income statement?
a. Acid-test ratio
b. Debt-to-equity ratio
c. Earnings per share
d. Gross profit ratio

Answer 1

Answer:

d. Gross profit ratio

Explanation:

In the case of common size income statement analysis, the each and every item display in the income statement should be recognized as the percentage of sales

Also the formula of gross profit is

= Gross profit ÷ Sales

Therefore the option d is correct