QUESTION ONE:

In 2022, your company is looking for an investment opportunity. The company is considering to invest in Delta Company. The following financial information related to Delta Company for years ended 2020 and 2021:

Delta Company Income Statement in US$
	31/12/2020	31/12/2021
Sales	$500,000	$700,000
Gross profit	$161,300	$205,000
Selling and administrative expense	$45,200	$74,300
Interest expense	$15,200	$29,100
Net income	$44,100	$45,600

After reviewing the income statements, your president could not determine if the investment is worth of making, so he asked you to analyze the income statements for Delta Company using the Common-Size approach and recommend to him if this investment is worth making and why?

ANSWER QUESTION ONE: