The following information is from Megabux, Inc.'s annual report for the years ended December 31:

	2012	2011	2010
Sales	$120,000	$110,000	$100,000
Cost of goods sold	58,000	52,000	46,000
Operating expenses	48,000	44,000	42,000
Interest expense	12,000	9,000	6,000
Net income	$ 2,000	$ 5,000	$ 6,000

Refer to the Megabux annual report above. Which of the following describes the trend in the profit margin ratio for the

threeyear

period?

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Part 1

A.

The increase in sales each year is more than enough to cover the increase in expenses.

B.

The ratio is getting worse because expenses are growing faster than sales.

C.

The ratio is getting worse because Megabux has increased its selling prices.

D.

There is no significant change in the ratio over the three years.