One Reason That a Common-Size Statement Is a Useful Tool

question 114

Multiple Choice

One reason that a common-size statement is a useful tool in financial performance evaluation is that it enables the user to

• A)make better comparisons of two companies of different sizes in the same industry.
• B)determine which companies in a single industry are of the same size.
• C)judge the relative potential of two companies of similar size in different industries.
• D)determine which companies in a single industry are of the same value.

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Definitions:

Federal Regulations

Rules set by the federal government to control and guide the practices of businesses, individuals, and other organizations within the country.

Mortgage Lending Standards

Criteria used by banks and financial institutions to determine the eligibility of borrowers for a mortgage.

Down Payment

An upfront payment made when purchasing an expensive item or property on credit, representing a percentage of the total purchase price.

Housing Prices

The monetary values assigned to homes and apartments in the real estate market, influenced by factors such as location, demand, and economic conditions.