When Using Common- Size Financial Statement to Evaluate the Operating

question 52

Multiple Choice

When using common- size financial statement to evaluate the operating results of two different companies, the gross margin of Company A is expressed as a percentage of:

• A)a common standard for both Company A and Company B.
• B)the total gross margins of Companies A and B.
• C)Company B's gross margin.
• D)Company A's sales.

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Definitions:

Need Eyeglasses

The requirement for corrective lenses due to vision impairments such as nearsightedness or farsightedness.

Proportion

A fraction, portion, or segment that is assessed in relation to its entire entity.

M&M Candy

A brand of small, multi-colored chocolate candies covered in a hard shell.

Probability

The likelihood that an event will happen, expressed numerically between 0 and 1.