Oceanaqua Apparel (OA) is a manufacturer of swimwear. Abbreviated common-size income statements and relevant industry data are presented below.
OA Common-Size Income Statement201520142013Net Revenues100.0%100.0%100.0%Cost of Sales64.362.559.5Gross Profit35.737.540.5Selling, General & Admin23.523.225.5Advertising0.52.93.1Operating Income11.711.411.9Interest Expense1.82.23.8Earnings Before Taxes9.99.28.1Taxes2.02.01.9Net Income7.97.26.2Swimwear IndustryGross Profit Margin38.4%39.1%40.7%Net Profit Margin7.16.86.1
Which statement about OA’s three-year financial performance is most accurate? OA’s:
- effective tax rate has been holding steady at approximately 2%.
- revenues per dollar of sales costs are falling over the time period.
- profit margins indicate performance superior to the industry average.
