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The gross profit percentage decreased from 36.5% in 2014 to 24.8% in 2015. What is the trend in this change?
Select one:
a. The trend cannot be determined unless the dollar amount of the change is also know.
b. This change represents a downward, or negative, trend.
c. This change represents an upward, or favorable, trend.
d. The answer depends upon whether net sales increased or decreased during the period.
Expert Answer
The correct option is
b. This change represents a downward, or negative, trend.
A decrease in gross profit percentage which is measured as :Gross profit/Sales shows that the firm is facing a downward trend in terms of the gross profits it is being able to generate out of the sales ie lesser gross profits are being generated during 2015 as compared to the trend in 2014 .
