Selected Data from the Financial Statements Are Provided Below

question 118

Multiple Choice

Selected data from the financial statements are provided below:

-Refer to Rags to Riches. Which of the following would result from a horizontal analysis of the company's income statement?

• A)Cost of goods sold is 42.1% of net sales for 2020.
• B)Gross profit is 57.9% of net sales for 2020.
• C)Cost of goods sold decreased 23.8% from 2019 to 2020.
• D)Inventory decreased $4,000 or 20% during 2019.

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Definitions:

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations by comparing net income before interest and taxes to its interest expenses.

Depreciation Expense

The allocation of an asset's cost over its useful life, reflecting the decrease in value over time due to wear and tear or obsolescence.

Accounts Receivable

Money owed by customers to a company for goods or services that have been delivered but not yet paid for.

Inventory Turnover

A financial metric measuring the rate at which a company sells and replaces its stock of goods during a given period.