Which of the following is generally the most useful in analyzing companies of different size?
A) Comparative financial statements
B) Audit reports
C) Common size financial statements
D) Inflation adjusted financial statements

Question

Quizplus · Accepted Answer

Common size financial statements are the most useful in analyzing companies of different size because they allow for easy comparison of financial data across companies of varying sizes. Common size financial statements express each item as a percentage of a common base, such as total assets or net sales, making it easier to identify trends and patterns in financial data regardless of the size of the company. Comparative financial statements and inflation-adjusted financial statements are also useful in some contexts, but may not provide as clear of a picture when comparing companies of different sizes. Audit reports are important for assessing the reliability of financial information, but they do not provide information on the relative performance of different companies.

Which of the Following Is Generally the Most Useful in Analyzing