Skippy, Inc. includes the information below in its annual report for FY 2022

Income Statement Items

Sales	$25,000,000
Cost of goods sold	$15,000,000
Pretax earnings	$2,500,000
Selected Balance Sheet Items
Merchandise inventory	$1,250,000
Total assets	$4,000,000

Management plans to cut cost of goods sold by 10% for the upcoming year while retaining the same sales. What will Skippy’s profit leverage effect be for FY 2023? 

Answer rating: 100% (QA)

To calculate the profit leverage effect we can use the following formula Profit Leverage Effe... View the full answer