Why do better decisions regarding the purchasing and managing of goods for sale frequently cause dramatic percentage increases in net income?

 

Answer:

Net Income = Sales - Cost of goods sold-Operating and non-working expenses. The percentage of net income to revenues is by and large low contrasted with the percentage of cost of goods sold or coordinate material costs to incomes. Better choices with respect to the purchasing and overseeing of products for sale can diminish the level of cost of goods sold or coordinate material costs to revenues. A little decrease in cost of goods sold or coordinate material costs can cause sensational rate increases in net income. 

Cost of goods sold incorporates purchases and in this way if buys are decreased with amazing arranging abilities, cost of goods sold reduced. Therefore, net income would increase. Similarly, when different expenses are decreased with compelling production and actualizing cost control in different issues will reduce the operating and non-operating costs. Therefore, Net income would increment in a percentage.