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What will be the impact on the net income before taxes

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Reference no: EM132571350

Assume Adams Distributors' Operating Expenses are essentially fixed-that is, they will not change significantly in the case of either an increase or decrease in sales. Assume also that competition prevents Adams from increasing its prices and also from finding cheaper goods to sell, so that the Gross Profit ratio (percentage) is also fixed constant at any level of sales.

Please answer the following questions:

Question 1. If Adams' suffers a 20% decrease in Net Sales, what will be the impact on the net income before taxes?

Reference no: EM132571350

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