Income statement information for Sadie Company is below:

Sales $175,000

Cost of goods sold 115,000

Gross profit $ 60,000

1. Using vertical analysis of the income statement for Sadie Company, determine the gross profit margin.

34.285%

Explanation:

Income Statement:

Particular Amount

Sales $175,000

Less: Cost of goods sold $115,000

Gross profit $ 60,000

Gross profit Margin = [ (Net Sales - cost of goods sold) / Net Sales]100

Gross profit Margin = [ ($175,000 - $115,000) / $175,000] 100

Gross profit Margin = [$60,000 / $175,000]100

Gross profit Margin = [0.34285]100

Gross profit Margin = 34.285%