A financial analyst is reviewing a competitor$$s income statements for the past $2$ years.

Year $1$

Year $2$

Sales

$250,000$

$275,000$

Cost of goods sold

$155,000$

$160,000$

Gross profit

$95,000$

$115,000$

Selling expenses

$35,000$

$40,000$

General expenses

$45,000$

$50,000$

Operating income before income taxes

$15,000$

$25,000$

Taxes related to operations

$2,500$

$3,500$

Net income

$12,500$

$21,500$

The financial analyst is able to conclude that the competitor$$s

Common base year income statements will show that gross profit increased by $17\%$ in Year $2$ as compared to Year $1.$

Common size income statements will show operating income before income taxes at $22\%$ for Year $2.$

Common base year income statements will show that selling expenses increased by $14\%$ in Year $2$ as compared to Year $1.$

Common size income statements will show taxes related to operations at $16\%$ for Year $2.$