4. One of the arguments for capitalizing the direct-response is that it allows the company to have more cash on the hand to operate and invest in the future. If PolyMedica Corp were to book it as an expense it would have an impact on the PolyMedica financial statements, which will potentially lower the shareholder's confidence. PolyMedica advertising cost were S64,061 in March of 2003 and $52,112 in March of 2002. The company had spent an additional $11,949 on advertising in a 12-month frame period. Selling, general and administrative expenses were $163,758 was March of 2003 and S133,609 of March 2002. By calculating the advertising as an expense. Increased to S212,177 in 2003 and $176,107 in 2002. Due to the total advertising expense allocated in the expense section on the income statement, if PolyMedica had expenses their advertising there would have been a negative net income in 2003 of $8, 162 and S12,087 in 2002. By capitalizing the direct response advertising, it allows PolyMedica to write-off the expense over the four years, which gives them a greater net income for each of those years. These will decree the initial expenses and increase net income.