Arlington Company has prepared the following common-size income statement to compare its performance with industry averages:
|
Arlington Co. |
Industry |
Revenues |
100 |
100.00% |
Cost of goods sold |
43.80% |
39.70% |
Gross Profit |
56.20% |
60.30% |
Operating Expenses: |
|
|
Sales and marketing expenses |
18.10% |
21.40% |
General and administrative expense |
12.00% |
14.20% |
Research and development expense |
4.10% |
4.00% |
Total operating expenses |
34.20% |
39.60% |
|
|
|
Income before income tax |
22.00% |
20.70% |
Income tax expenses |
4.40% |
4.20% |
Net income (loss) |
17.60% |
16.50% |
Which of the following statements can be correctly concluded from the above data?
· Arlington’s gross profit per dollar of sales is higher than the industry average.
· Arlington’s net income is higher than the industry average.
· Arlington’s achieves better results than the industry by earning higher revenues.
· Arlington’s achieves better profitability than the industry, primarily by controlling operating expenses more effectively.
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