Question

Taking into consideration the major activities of a business, list five possible explanations for the increase in Miami Manufacturing Company's profits (Net Income) in 2017?

Year	2012	2013	2014	2015	2016	2017
Profit (Millions)	$24	$25	$26	$27	$28	$35

Answer 1

Followings are the five possible explanations for the increase in Miami Manufacturing Company's profits (Net Income) in 2017;

1. Units sale might have increased, due to which there is higher net income.

2. Cost of goods sold might have been decreased, due to which there is higher net income.

3. Operating expenses might have been decreased, due to which there is higher net income.

4. Higher non-operating income in-compare to non-operating expenses may lead to higher net income in 2017.

5. Sale price per unit might have been increased but units remained unaffected which lead to higher net income in 2017.