The cost of sales expense and the selling, advertising and general administration expenses of a company steadily increases over a five year period, what affect will this have on net earnings and why?

The whole of the trading account and the
Profit and loss account have to be viewed
As an integral situation.
Starting by calling the SALES 100%.

Every item should be then analysed in relation
To the Sales Percentage.

We derive the Cost of Sales Percentage.
This will then give us the GROSS MARGIN
Percentage.
This has great significance.
From this all the other expenses have to be met.
If successful one would finish up with a NET PROFIT. Also expressed as a prcentage.

All thse figures should be compared with their equivalent budgeted figures.
It would help also if some recognition is made in these analysis as to the competitive firms
And also the industry as a whole.
An increase over a period over one of the expenses does not necessarily spell doom.
Savings can be made in the other expenses.