An analyst prepares the following common-size income statements for Perez Company: 20X1 20X2 20X3 Sales 100% 100%
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Question:
An analyst prepares the following common-size income statements for Perez Company:
20X1 | 20X2 | 20X3 | |
Sales | 100% | 100% | 100% |
Cost of goods sold | 50% | 52% | 53% |
Selling and administrative expense | 16% | 12% | 9% |
Interest income | 4% | 4% | 4% |
Pretax income | 30% | 32% | 34% |
Income tax expense | 15% | 16% | 17% |
Net income | 15% | 16% | 17% |
Based only on this information, Perez's improving net profit margin is most likely a result of:
improving gross margins. | ||
greater financial leverage. | ||
controlling operating expenses. |
Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
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