Common-Size Statements Allow the Comparison of Two or More Companies

question 147

True/False

Common-size statements allow the comparison of two or more companies with different amounts of net sales and assets.

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Definitions:

Investing Activities

Financial transactions related to the acquisition or sale of long-term assets and other investments not considered cash equivalents.

Direct Method

An accounting practice for presenting cash flows from operating activities by listing major classes of gross cash receipts and payments.

Operating Activities

Business actions involving the primary operations and transactions of a company.

Taxes Payable

The amount of tax liability a company owes to the government but has not yet paid; it appears as a liability on the balance sheet.