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

question 80

Multiple Choice

Arlington Company has prepared the following common-size income statement to compare its performance with industry averages: Which of the following statements can be correctly concluded from the above data?

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

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Definitions:

Compounded Semi-Annually

This refers to the process of calculating interest on the initial principal and the accumulated interest over two periods within a year.

11%

11% typically refers to an interest or annual rate, indicating that 11 percent of the principal amount will be paid in interest over a year.

Nominal Rate

The promoted or declared rate of interest on a loan or investment, excluding the impacts of compounding and inflation.

Compounded Monthly

Interest calculation method involving the addition of interest to the principal sum of a loan or deposit, repeated every month.