Which of the following statements is true with regard to the gross profit ratio?

1. An increase in cost of goods sold would increase the gross profit ratio (assuming sales remain constant).

2. An increase in the gross profit ratio may indicate that a company is efficiently managing its inventory.

3. An increase in selling expenses would lower the gross profit ratio.

a. 1

b. 2

c. 1 and 2

d. 2 and 3