Arlington Company has prepared the following common-size income statement to |getmeaplus

Sunday, 7 October 2012

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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