Which of the Following Is NOT True of Common Size

question 4

Multiple Choice

Which of the following is NOT true of common size statements?

• A) All balance sheet figures are expressed as a percentage of shareholders' equity.
• B) All figures in the income statement are expressed as a percentage of sales.
• C) Common size statements enable trends over time for a single company to be detected.
• D) Common size statements assist in comparing companies of different sizes.

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Definitions:

Production Volume

The total quantity of goods produced within a specific period by a manufacturing entity.

Engineering Approach

A detailed analysis of cost behavior based on an industrial engineer’s evaluation of the inputs that are required to carry out a particular activity and of the prices of those inputs.

Mixed Costs

Expenses that have both fixed and variable components, changing with the level of activity but having a base cost.

Statistical Analysis

The process of collecting, examining, interpreting, and presenting data to discover underlying patterns and trends.