Which of the following is an example of vertical analysis?

a- Comparing gross profit across companies.

b- Comparing income statement items as a percentage of sales.

c- Comparing debt with industry averages.

d- Comparing the change in sales over time.

The Sports Addition reports net sales of $2 million, cost of goods sold of $1 million, operating expenses of $500,000, and other expenses of $100,000. If you were to perform a vertical analysis of this income statement, you would divide each of these income statement line items by:

a- $400,000.

b- $1,000,000.

c- $100,000.

d- 2,000,000.