Business analysts claim that, after breaking -even (reaching a point of no profit and no loss ),
Question:
Business analysts claim that, after breaking -even (reaching a point of no profit and no loss ), a 1 0/0 increase in sales will increase net profit by 5%. However , during the last financial year many companies that broke -even and showed more than a 1% increase in sales also recorded a decrease in net profits .
Which of the following conclusions can be made from the above information ?
A.When a company breaks -even , sales are likely to increase by at least 1%.
B.The business analysts failed to consider other factors that influence the profitability of a company.
C.The last financial year is not representative of the profit potential for companies that break even .
DSales are the most important , but not the only, factor that decides a company's profitability .
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill