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A company had the following income statement figures for 2016 and 2017 : 2017 2016 Sales...

A company had the following income statement figures for 2016 and 2017 :

2017 2016

Sales

Cost of goods Sold

570 000 550 000

300 000 310 000

Gross Margin

Operating Expenses

270 000

240 000

180 000

150 000

Net income

90 000

90 000

Calculate component percentages for this information. Please, state your conclusions.

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Answer #1

Solution: - Conclusions: Calculating the net income component percentage (%) allows us to compare the rise or decline in net income for a company from one year to another, if there is a decline in the net income percentage from the previous year to the current year, it means the company was not as profitable in the current year. Through, in the current scenario, the gross margin components percentage was increased but net income percentage declined so the company is not in a profitable situation.

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