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 Skippys profit leverage effect be for FY 2023

Question: 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

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?

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