You would like to compare your firm's cost structure to that of your competitors.However,your competitors are much larger in size than your firm.Which one of these would best enable you to compare costs across your industry?
A)Pro forma balance sheet
B)Common-size income statement
C)Statement of cash flows
D)Pro forma income statement
E)Common-size balance sheet

Question

Quizplus · Accepted Answer

A common-size income statement would be the best choice to compare costs across the industry because it expresses each expense item as a percentage of sales. This allows for a more accurate comparison between firms of different sizes as it standardizes the data based on revenue.

You Would Like to Compare Your Firm's Cost Structure to That