Arlington Company Has Prepared the Following Common-Size Income Statement to Compare

question 93

Multiple Choice

Arlington Company has prepared the following common-size income statement to compare its performance with industry averages: $$\begin{array} { | l | r | r | } \hline & \text { Arlington Co. } & \text { Industry } \\\hline \text { Revenues } & 100.0 \% & 100.0 \% \\\hline \text { Cost of sales } & 43.8 \% & 39.7 \% \\\hline \text { Gross profit } & 56.2 \% & 60.3 \% \\\hline \text { Selling and general expenses: } & & \\\hline \text { Sales and marketing expense } & 18.1 \% & 21.4 \% \\\hline \text { General and administrative expense } & 12.0 \% & 14.2 \% \\\hline \text { Research and development expense } & 4.1 \% & 4.0 \% \\\hline \text { Total selling and general expenses } & 34.2 \% & 39.6 \% \\\hline & & \\\hline \text { Profit before tax } & 22.0 \% & 20.7 \% \\\hline \text { Income taxexpense } & 4.4 \% & 4.2 \% \\\hline \text { Profit (loss) } & 17.6 \% & 16.5 \% \\\hline\end{array}$$ Which of the following statements can be correctly concluded from the above data?

• A)Arlington achieves better results than the industry by earning higher revenues.
• B)Arlington achieves better profitability than the industry,primarily by controlling selling and general expenses more effectively.
• C)Arlington's profit is higher than the industry average.
• D)Arlington's gross profit per dollar of sales is higher than the industry average.

Understand ethical standards in HRM practices.

Recognize the importance of rights in the workplace, such as freedom of conscience, speech, and privacy.

Identify the roles and competencies of HR professionals.

Explain the significance of human resource planning and evidence-based HR in organizational strategy.

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Definitions:

Accounting Periods

Periods of time covered by financial statements, usually consisting of 12 months.

Prepaid Expenses

Payments made in advance for goods or services, which are recognized as assets on a balance sheet and expensed over time as the benefit is received.

Asset Account

An account that records the value of resources owned by an entity, which can provide future economic benefits.

Unearned Revenue

Money received by a company for goods or services yet to be provided; it is recorded as a liability until the service or product is delivered.