Common-size financial statements:
A)allow for an easy comparison of balance sheets and income statements across firms in the industry.
B)provide quantitative clues about the direction that the firm is moving.
C)are obtained by dividing all income statement accounts by net sales and all balance sheet accounts by total assets.
D)All of these describe common-size financial statements.

Question

Quizplus · Accepted Answer

Common-size financial statements allow for easy comparison of balance sheets and income statements across firms in the industry, provide quantitative clues about the direction that the firm is moving, and are obtained by dividing all income statement accounts by net sales and all balance sheet accounts by total assets. Therefore, all of these choices describe common-size financial statements.

Common-Size Financial Statements