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The following information is from Megabux, Inc.'s annual report for the years ended December 31: Sales Cost of goods sold Operating expenses Interest expense Net
The following information is from Megabux, Inc.'s annual report for the years ended December 31: Sales Cost of goods sold Operating expenses Interest expense Net income 2012 $120,000 58,000 48,000 12,000 $ 2,000 2011 $110,000 52,000 44,000 9,000 $ 5,000 2010 $100,000 46,000 42,000 6,000 $ 6,000 Refer to the Megabux annual report above. Which of the following describes the trend in the profit margin ratio for the three-year period? A. The ratio is getting worse because expenses are growing faster than sales. B. The ratio is getting worse because Megabux has increased its selling prices. C. There is no significant change in the ratio over the three years. D. The increase in sales each year is more than enough to cover the increase in expenses
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