When Using Common-Size Financial Statements to Evaluate the Operating Results

question 37

Multiple Choice

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

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

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Definitions:

Immediate Future

Pertains to the very near term, usually referring to events or outcomes expected to happen very soon.

Violence

The use of physical force with the intention to harm someone or something.

Emotional

Related to feelings or how one responds to those feelings, involving mood, temperament, and disposition.

Verbal

Pertaining to words, either spoken or written, used in communication to convey messages and express thoughts.