One Manager (Adam)says That the Income Statement Should Be Strong

question 94

Multiple Choice

One manager (Adam) says that the income statement should be strong this year because the company has achieved a high level of sales revenue.Another manager (Eve) says that even with strong sales revenue,the income statement might not look particularly good.What is Adam assuming?

• A) That high revenues equate to a healthy income statement
• B) That various factors besides sales revenue must be taken into account to calculate the income statement
• C) That sales revenue next year will likely be as good as this year's
• D) That operating expenses have been relatively high this year
• E) That gross profit is much lower than gross sales

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Definitions:

Dividend Yield

A metric indicating the annual dividends a firm distributes in relation to its share price.

Asset Turnover

A financial ratio indicating how efficiently a company uses its assets to generate revenue.

Inventory Turnover

is a ratio showing how many times a company's inventory is sold and replaced over a specific period, highlighting the efficiency of inventory management.

Grocery Store

A retail store that primarily sells food, including fresh produce, meats, dairy, and other various packaged foods.