Please Refer to the Following Data Which of the Following Statements Is a Valid Conclusion Based

question 72

Multiple Choice

Please refer to the following data: $\begin{array}{|l|r|r|r|r|}\hline \text { (Dollar amounts in millions) } & 2014 & & 2013 & \\\hline & \text { Amount } & \text { \% of Total } & \text { Amount } & \text { \% of Total } \\\hline \text { Revenues } & \$ 6,355 & 100.0 \% & \$ 4,920 & 100.0 \% \\\hline \text { Cost of revenues } & 3,370 & 53.0 \% & 2,200 & 44.7 \% \\\hline \text { Gross Profit } & 2,985 & 47.0 \% & 2,720 & 55.3 \% \\\hline \text { Operating expenses: } & & & & \\\hline \text { Sales and marketing expense } & 675 & 10.6 \% & 580 & 11.8 \% \\\hline \text { General and administrative expense } & 410 & 6.5 \% & 425 & 8.6 \% \\\hline \text { Research and development expense } & 470 & 7.4 \% & 390 & 7.9 \% \\\hline \text { Other expense } & 400 & 6.3 \% & 695 & 14.1 \% \\\hline \text { Total operating expenses } & \$ 1,955 & 30.8 \% & \$ 2,090 & 42.5 \% \\\hline & & & & \\\hline \text { Income before income tax } & \$ 1,030 & 16.2 \% & \$ 630 & 12.8 \% \\\hline \text { Income tax expense } & 230 & 3.6 \% & 210 & 4.3 \% \\\hline \text { Net income (loss) } & \$ 800 & 12.6 \% & \$ 420 & 8.5 \% \\\hline\end{array}$
Which of the following statements is a valid conclusion based on this data?

• A) Profitability in 2014 took a dive as operating expenses increased by 30.8%.
• B) Profitability in 2014 improved greatly, as net income increased significantly as a percentage of sales.
• C) Net income in 2014 increased 12.6% over the prior year.
• D) Net income in 2014 went down because gross profit as a percentage of sales declined over the 2-year period.

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Definitions:

Communication Interference

A phenomenon where the transmission of information is hindered by noise, physical barriers, or competing signals.

Exchange of Messages

The process by which information is communicated between individuals, groups, or systems, often involving a sender, message, and recipient.

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Medicine

The science and practice of diagnosing, treating, and preventing disease and injury, as well as maintaining overall health.