OAKBROOK COMPANY

Comparative Income Statements

For Years Ended December 31, 2017 and 2016

	2017		2016
Sales	$ 980		$ 850
Less cost of goods sold	525		415
Gross profit	455		435
Less operating expenses:
Wage expense	90		88
Depreciation expense	18		12
Rent expense	23		20
Miscellaneous expense	24		36
Total operating expenses	155		156
Operating income	300		279
Less other expenses:
Interest	9		33
Income before tax	291		246
Less income tax expense	116		98
Net income	$ 175		$ 148

In the judgment of the credit analysts of Oakbrook Company, what issue would be of most concern or source of optimism?

Select one:

A. Income taxes increased 18.3 percent.

B. There was a 10.0 percent increase in income before taxes.

C. There was a 26.5 percent increase in cost of goods sold with only an 15.3 percent increase in sales.

D. Miscellaneous expense decreased 33.3 percent.