Common-Size Analysis Is Based on the Preparation of Common-Sized Financial

question 21

Multiple Choice

Common-size analysis is based on the preparation of common-sized financial statements,i.e. ,an income statement and a balance sheet presented in percentage of a base figure (indexed as 100) .What is generally the base for the income statement?

• A) Net income
• B) Net sales
• C) Exceptional revenue
• D) Interest expense

---

Definitions:

Quantity Effect

The impact on total revenue when the quantity sold changes while the price remains the same.

Marginal Cost

The increased expenditure resulting from making an additional unit of a product or service.

Oligopoly

A market structure characterized by a small number of firms that have significant market power, leading to limited competition.

Price Fixing

An illegal practice where businesses collude to set prices at a certain level, rather than allowing market forces to determine them.