Use the Following Selected Information from Wheeler,LLC to Determine the 2017

question 102

Multiple Choice

Use the following selected information from Wheeler,LLC to determine the 2017 and 2016 common size percentages for operating expenses using Net sales as the base.
$\begin{array}{|l|r|r|}\hline&2017&2016\\\hline \text { Net sales } & \$ 276,200 & \$ 231,400 \\\hline \text { Cost of goods sold } & 151,900 & 129,590 \\\hline \text { Operating expenses } & 55,240 & 53,240 \\\hline \text { Net earnings } & 27,820 & 19,820\\\hline\end{array}$

• A) 36.4% for 2017 and 41.1% for 2016.
• B) 55.0% for 2017 and 56.0% for 2016.
• C) 23.9% for 2017 and 23.0% for 2016.
• D) 103.8% for 2017 and 100.0% for 2016.
• E) 20.0% for 2017 and 23.0% for 2016.

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Definitions:

Security Market Line

A graphical representation of the expected return of all risky marketable securities as a function of their beta, or systemic risk, according to the capital asset pricing model.

Diversifiable Risk

Relates to the risk that can be reduced or eliminated from a portfolio by holding a variety of investments.

Non-Diversifiable Risk

A type of investment risk that cannot be eliminated through diversification, arising from factors that affect all companies.

Efficient Markets Hypothesis (EMH)

The hypothesis is that actual capital markets, such as the TSX, are efficient.