A Financial Statement That Shows Each Item as a Percentage

question 84

Multiple Choice

A financial statement that shows each item as a percentage of one key item on the statement is referred to as:

• A) benchmarking.
• B) common-size statement.
• C) horizontal analysis.
• D) statement of cash flows.

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Definitions:

Annually Compounded

An investment or interest calculation method where the interest earned over the year is added to the principal at year-end, affecting the amount earned the following year.

Nominal Rate

The nominal rate refers to the interest rate stated on a loan or investment agreement before adjusting for inflation or other factors.

Annually Compounded

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, once per year.

Nominal Interest Rate

The interest rate before adjustments for inflation or other factors that affect the real value of money.