Which of the Following Statements Is Not Correct

question 15

Multiple Choice

Which of the following statements is not correct?

• A) The common-size analysis permits the analyst to compare and contrast the financial statements of two and more companies in the same industrial sector or risk class more easily.
• B) The common-size analysis reduces the problem of the size difference between companies.
• C) The common-size analysis helps the analyst formulate hypotheses about the most efficient business model between the firms compared,and identify possible thresholds in economies of scale.
• D) The common-size analysis allows only comparison over one year.

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Definitions:

Sourcing Decision

The process of determining where and how a company will procure the necessary goods or services to conduct its business.

Traditional Inventory

A conventional method of inventory management where stocks are maintained to meet demand without considering just-in-time strategies.

Manual Labor

Work performed by hand or with basic tools rather than machinery, often requiring physical effort.

Days Payable Outstanding

A financial metric that measures the average number of days a company takes to pay its invoices and bills to its suppliers and creditors.