All of the following are true about the use of common-size financial statements except:
A) Financial statement users can use common-size financial statements to compare a company's current financial position to its financial position at some past time.
B) Financial statement users can use common-size financial statements to compare a company's performance over time.
C) Financial statement users can use common-size financial statements to compare a company to different firms of varying size.
D) Financial statement users can use common-size financial statements to analyze financial statements without the distortions of inflation or currency fluctuations.

Question

Quizplus · Accepted Answer

Common-size financial statements do not inherently adjust for inflation or currency fluctuations; they standardize financial data by expressing line items as a percentage of a base figure, allowing for easier comparison across time periods or between companies.

All of the Following Are True About the Use of Common-Size