Which of the Following Is Not True About Common Size

question 78

Multiple Choice

Which of the following is not true about common size financial statements?

• A) Such statements are used to uncover data irregularities.
• B) Such statements are constructed by calculating the percentage each line item of the income statement, balance sheet, and cash flow statement is of annual sales.
• C) Such statements are useful for comparing businesses of different sizes in the same industry at different moments in time.
• D) Common size statements applied over a number of consecutive periods may be used to determine if the target firm is deferring necessary spending.
• E) Common size statements may be calculated for both quarterly and annual financial data.