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Consider the following Income Statement for Zion Distribution. All values are in millions of dollars. Income...

Consider the following Income Statement for Zion Distribution. All values are in millions of dollars.

Income Statement for Zion Distribution:

2018

2019

$M

$M

Net Sales

230

240

Cost of sales

-160

-184

Gross Profit

70

56

           Expenses:

Selling, general, and administrative expenses

-22

-20

Research and development

-8

-7

Depreciation and amortization

-4

-3

Other income

4

6

Earnings before interest and taxes (EBIT)

40

32

Interest income (expense)

-6

-4

Pre-tax income (EBT)

34

28

Taxes

-4

-3

Net Income

30

25

        i.   Create common sized statements for 2018 and 2019 (10 marks)

ii.    What does the change in the operating margin between these two years imply about the company? (5 marks)

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