Common-size financial statements recast each statement item as:
A) a percentage of the "bottom line."
B) a percentage using industry averages for the "base number."
C) a percentage using a base year number for each line item.
D) a percentage of some "base number" on the financial statement in question.

Question

Common-size financial statements recast each statement item as: 
A) a percentage of the "bottom line."
B) a percentage using industry averages for the "base number."
C) a percentage using a base year number for each line item.
D) a percentage of some "base number" on the financial statement in question.

Quizplus · Accepted Answer

Common-size financial statements express each line item as a percentage of some "base number" on the financial statement in question. This is typically the total assets or total revenue. This allows for easy comparison between different companies, as well as analysis of trends in a company's financial performance over time.

Common-Size Financial Statements Recast Each Statement Item As