Vertical analysis keeps companies on track through benchmarking. Benchmarking can be used to compare companies in an industry or against a single competitor. Since my vertical analysis is based on the income statement, I’m using net sales/total revenue as my base. Looking at Microsoft’s general and administrative expenses for 2015 and 2016, I see they remain pretty constant, 13.95% in 2016 and 13.96% in 2015. As a matter of fact, general and administrative expenses for all companies are either the same or within a few percentage …show more content…
According to Investopedia.com, “higher ratios imply that the company is generating more revenue per dollar of assets”. A high asset turnover ratio is desirable; however, they vary by industry. Ratios less than 1 are typical in telecommunications industries due to their large bases, yielding a lower ratio. This theory is evident in my calculations; Microsoft Corporation has the lowest asset turnover ratio at 0.30. This may be a result of a large base or inefficiency. Apple follows at 0.70, and Amazon is