Income Statements for Royal, Inc. for the years ended December 31, 20X0 and December 31, 20X1 were as follows (in $ millions):
|
|
20X0 |
20X1 |
|
Sales |
78 |
82 |
|
Cost of Goods Sold |
(47) |
(48) |
|
Gross Profit |
31 |
34 |
|
Sales and Administration |
(13) |
(14) |
|
Operating Profit (EBIT) |
18 |
20 |
|
Interest Expense |
(6) |
(10) |
|
Earnings Before Taxes |
12 |
10 |
|
Income Taxes |
(5) |
(4) |
|
Earnings after Taxes |
7 |
6 |
Analysis of these statements for trends in operating profitability reveals that, with respect to Royal’s gross profit margin and net profit margin:
A. gross profit margin decreased but net profit margin increased in 20X1.
B. both gross profit margin and net profit margin increased in 20X1.
C. gross profit margin increased in 20X1 but net profit margin decreased.
|
