Which of the Following Descriptions Best Describes Common-Size Analysis

question 75

Multiple Choice

Which of the following descriptions best describes common-size analysis?

• A)converting dollar values on the financial statements to percentages of a specific base amount
• B)comparing data from one company to with those of another company over the same period
• C)examining company information from multiple periods
• D)using historical information as a basis for predicting future outcomes

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Definitions:

Average Annual Gross Receipts

The average amount of money received by a business before any deductions over a specified period, typically 3 to 5 years.

Subject

In general terms, this refers to the main topic or entity being discussed or analyzed.

FMV

Fair Market Value; the price an asset would sell for on the open market between a willing buyer and a willing seller.

Basis

The amount of investment in an asset for tax purposes, used to calculate gain or loss on the asset's sale.