The Arlington Company Prepared a Common-Size Income Statement to Compare

question 151

Multiple Choice

The Arlington Company prepared a common-size income statement to compare its results with its key competitor, Bardo Company. Please refer to the following data: Which of the following statements can be correctly concluded from the above data?

• A)Arlington's cost of goods sold is lower than Bardo's on a per unit basis.
• B)Arlington produces a higher amount of gross profit than Bardo.
• C)Arlington makes less total net income than Bardo.
• D)Bardo has more effective cost control than Arlington in the area of operating expenses.

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Definitions:

Nominal Exchange Rate

The exchange rate at which the currency of one nation can be exchanged for the currency of another nation, without considering inflation adjustments.

Purchasing-Power Parity

An economic theory that compares different countries' currencies through a basket of goods approach, to evaluate the relative purchasing power.

Aruban Florin

The currency of Aruba, symbolized as Afl., used within its economic transactions.

Thai Bhat

The currency of Thailand.