For the manufacturing and sales transaction of inflators, ROS is a more reliable PLI than the Berry ratio when differences in accounting classifications between cost of sales and operating expenses may be significant. In addition, the transaction amount between DSST and its related parties accounts for a relatively large portion of DSST’s full costs (the total of COGS and SG&A expenses) since DSST purchases component parts from DC and its related parties and pays royalty to DC. Furthermore, a PLI based on assets is significantly affected by the difference of the fundamental characters of assets (asset portfolio, years in use, asset level, etc.), and by the long-term asset value recorded at the acquisition value.
Therefore, the ROS is selected as the most reliable PLI for the manufacturing and sales transaction of inflators to obtain target ranges.