Gross profit and net profit ratios for Forest Fences Which statement best describes the situation represented in the graph? (A) Year 1 was a period of decreasing expenses and Year 2 was a period of increasing expenses - HSC - SSCE Business Studies - Question 12 - 2003 - Paper 1

To analyze the graph, we observe the changes in both the gross profit ratio and net profit ratio from Year 1 to Year 2. The gross profit ratio appears to remain relatively stable, indicating consistent sales performance. In contrast, the net profit ratio shows a decrease, suggesting that while sales performance did not decline, the expenses increased or sales cost was impacted negatively in Year 2 compared to Year 1.

Thus, based on this analysis, the most accurate statement that reflects the graph’s depiction is:

(C) Year 1 was a period of improved sales performance and Year 2 was a period of decreasing expenses.