According to Dolphini notes, some of their sales would be to themselves. What calculation issue does this raise?

• A. Intercompany sales were not factored in calculations
• B. Currency fluctuations ignored
• C. Tax credits overstated
• D. Inventory turnover neglected

Answer: (A)

Intercompany transactions are internal transfers within a corporate group, where one entity sells to another within the same company family. When you’re calculating overall performance or preparing consolidated numbers, these internal sales should be eliminated so they don’t distort external revenue and margins. If the notes point out that some sales would be to themselves, the issue is that these intercompany sales were not factored into the calculations. That means the analysis isn’t accounting for or properly offsetting these internal transfers, which can misstate revenue, costs, and profitability.