Question

Selected comparative financial statements of Korbin Company follow.

KORBIN COMPANY
Comparative Income Statements
For Years Ended December 31, 2019, 2018, and 2017
	2019			2018			2017
Sales	$	479,843		$	367,599		$	255,100
Cost of goods sold		288,865			230,117			163,264
Gross profit		190,978			137,482			91,836
Selling expenses		68,138			50,729			33,673
Administrative expenses		43,186			32,349			21,173
Total expenses		111,324			83,078			54,846
Income before taxes		79,654			54,404			36,990
Income tax expense		14,816			11,153			7,509
Net income	$	64,838		$	43,251		$	29,481

KORBIN COMPANY
Comparative Balance Sheets
December 31, 2019, 2018, and 2017
	2019			2018			2017
Assets
Current assets	$	54,825		$	36,695		$	49,052
Long-term investments		0			1,100			4,700
Plant assets, net		98,747			89,776			51,941
Total assets	$	153,572		$	127,571		$	105,693
Liabilities and Equity
Current liabilities	$	22,422		$	19,008		$	18,496
Common stock		67,000			67,000			49,000
Other paid-in capital		8,375			8,375			5,444
Retained earnings		55,775			33,188			32,753
Total liabilities and equity	$	153,572		$	127,571		$	105,693

Refer to the results from parts 1, 2, and 3.

(a) Did cost of goods sold make up a greater portion of sales for the most recent year?

Did income as a percent of sales improve in the most recent year?

• Yes

• No

b) Did income as a percent of sales improve in the most recent year?

• Yes

• No

Answer 1

Answer (a) : Yes

as COGS is nearly 60.20% of sales so Cost of goods sold makes greater portion of the sale

Answer (b) Yes

Income as % of sale has improved in recent years as it is now 13.51% in compare to 11.77 % and 11.56% of 2018 and 2017 respectively

		2019	2018	2017
a	Sales	479,843	367,599	255,100
b	Cost of goods sold	288,865	230,117	163,264
c	Net income	64,838	43,251	29,481
d	COGS %= b*100/a	60.20%	62.60%	64.00%
e	Net income % = c*100/a	13.51%	11.77%	11.56%