Use the Following Information for Questions:
Consider the Following Income

question 57

Multiple Choice

Use the following information for questions:
Consider the following income statement data for Milan Inc.: $\begin{array} { l }&2011&2010\\ \text {Sales revenue }&\$97,000&\$86,200\\ \text { Less: Cost of goods sold}&45,600&53,400\\ \text {Gross profit }&51,700&32,800\\ \text { Less: Selling and administration costs Income before }&22,500&18,300\\ \text {income tax }&29,200&14,500\\\end{array}$

-Based on common size analysis, which of the following statements is correct?

• A)The increase in sales revenue in 2011 was caused by higher selling and administrative expenses.
• B)The company's cost to sales ratio improved in 2011.
• C)The increase in gross profit in 2011 was due to increased sales.
• D)Net income as a percent of sales declined in 2011.

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Definitions:

Dollar Exposure

The extent to which a company or investment is affected by changes in the US dollar value, particularly in foreign exchange risk.

Call Delta

A measure of the sensitivity of an option's price to a change in the price of the underlying asset.

Volatility Risk

The risk in the value of options portfolios due to unpredictable changes in the volatility of the underlying asset.

Hedge Ratio

A ratio used to measure the proportion of a position that is hedged or the amount of assets used to hedge a risk exposure.