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Athletic World reports the following vertical analysis percentages.                                          2021          2020Sales                                  100%          100%Cost of goods sold              48%           56%Operating expenses            35%           30%Did Athletic World’s income before tax as a percentage of sales increase, decrease, or stay the same? If net income as a percentage of sales increases, does that mean net income also increases? Explain.

Athletic World reports the following vertical analysis percentages.                                          2021          2020Sales                                  100%          100%Cost of goods sold              48%           56%Operating expenses            35%           30%Did Athletic World’s income before tax as a percentage of sales increase, decrease, or stay the same? If net income as a percentage of sales increases, does that mean net income also increases? Explain.

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter5: Sales And Receivables
Section: Chapter Questions
Problem 57BE
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Athletic World reports the following vertical analysis percentages.

                                          2021          2020
Sales                                  100%          100%
Cost of goods sold              48%           56%
Operating expenses            35%           30%

Did Athletic World’s income before tax as a percentage of sales increase, decrease, or stay the same? If net income as a percentage of sales increases, does that mean net income also increases? Explain.

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