If a company achieves a small increase in its gross profit percentage from one year to the next,the company:
A)will always have a higher net income.
B)must be obtaining products at a lower cost per unit.
C)must have increased its sales revenue.
D)none of the answers are acceptable.

Question

Quizplus · Accepted Answer

A small increase in gross profit percentage does not guarantee a higher net income, as net income is affected by other factors beyond gross profit, such as operating expenses and taxes. It also does not necessarily mean the company is obtaining products at a lower cost per unit, as the increase could be due to higher sales prices rather than lower costs. Similarly, an increase in gross profit percentage does not require an increase in sales revenue, as it could result from a more profitable mix of products sold or improved efficiencies.

If a Company Achieves a Small Increase in Its Gross