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38. Assume that a firm has the following data for the year ended 12/31/2019: Sales: $300 Depreciation expense: $20 Interest expense: $40 Tax expense: $40

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38. Assume that a firm has the following data for the year ended 12/31/2019: Sales: $300 Depreciation expense: $20 Interest expense: $40 Tax expense: $40 Net worth: $150 In addition, the company's net worth in 2018 was $150. Assume that in 2020, sales, cost of goods sold, and S, G, & A expenses remain the same, depreciation expense increases, interest expense increases, and tax expense decreases. Which of the following statements is true? 1. Gross margin will decrease. II. Operating margin will decrease. III. Net Income will increase. IV. Return on beginning equity will increase I only I and II only I, II and III only I, II, III, and IV

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