Common-Size Financial Statements Exclude the Dollar Amount as a Relevant

question 117

True/False

Common-size financial statements exclude the dollar amount as a relevant variable in the analysis,which makes comparison of one period with the next more meaningful.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales activities, such as rent, salaries, and insurance.

Net Income

The company's net income following the deduction of all expenses and taxes from its total revenue.

Variable Costs

Expenses that fluctuate in proportion to the level of output or activity, such as raw materials and direct labor costs.

Fixed Costs

Expenditures that do not vary with the degree of output or sales, for instance, rental fees, wages, and insurance premiums.