Theo Company's Gross Profit Rate has decreased over the last 3 years while Profit Margin has increased. Based upon that trend, Theo Company:

Note: Gross Profit Rate is calculated as Gross Profit Dollars divided by Net Sales. Profit Margin is calculated as Net Income divided by Net Sales.

• A.

  experienced an improvement in merchandise profit.

• B.

  experienced an improvement in overall solvency.

• C.

  experienced a decline in merchandise profit.

• D.

  experienced a decline in overall profitability.