MegaCorp accountants have come to the conclusion that based on comparison of thi
ID: 2595908 • Letter: M
Question
MegaCorp accountants have come to the conclusion that based on comparison of this year to last year they are a profitable business and have improved profitability; however, the company is still less profitable than its closest competitor. Which of the following vertical analyses would support this conclusion?
A : Gross profit as a percentage of net sales decreased from last year, net income decreased, and your closest competitor had lower net income this year.
B : Gross profit as a percentage of net sales decreased from last year, net income increased, and your closest competitor had higher net income this year.
C : Gross profit as a percentage of net sales increased from last year, net income decreased, and your closest competitor had higher net income this year.
D : Gross profit as a percentage of net sales increased from last year, net income as a percent of sales increased, but your closest competitor had higher net income as a percentage of sales this year.
Explanation / Answer
Gross profit as a percentage of net sales increased from last year, net income as a percent of sales increased, but your closest competitor had higher net income as a percentage of sales this year. Option D is correct