Question

Vertical analysis (common-size) percentages for Sandhill Co.’s sales revenue, cost of goods sold, and expenses are listed here. Vertical Analysis 2017 2016 2015 Sales revenue 100 % 100 % 100 % Cost of goods sold 61.2 63.6 66.1 Expenses 24.8 27.8 28.7 Collapse question part (a1) Calculate Sandhill’s net income as a percent of sales. (Round answers to 1 decimal place, e.g. 5.2%.) 2017 2016 2015 Net income % % %

Answer 1

Answer:

2015 Net income is 5.2%

2016 Net income is 8.6%

2017 Net income is 14.0%

Explanation:

Net income %=sales%-cost of goods sold %-expenses%

2015:

Sales is 100%

cost of goods sold is 66.1%

expenses is 28.7%

In 2015 net income %=100%-66.1%-28.7%=5.2%

2016:

Sales is 100%

cost of goods sold is 63.6%

expenses is 27.8%

In 2016 net income as % of sales=100%-63.6%-27.8%=8.6%

2017:

Sales is 100%

cost of goods sold is 62.1%

expenses is 24.8%

In 2017 net income as % of sales=100%-61.2%-24.8%=14.0%