Common-Size Analysis Requires the Analyst to Be Aware That Percentages

question 7

Multiple Choice

Common-size analysis requires the analyst to be aware that percentages can change because of all of the following except:

• A) changes in expenses in the numerator independent of changes in sales
• B) changes in sales independent of changes in expenses
• C) interaction effects between the numerator and denominator
• D) All of these are possible explanations.

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Definitions:

Consignment

A business arrangement where goods are left with a third party to sell, but the ownership remains with the supplier until the goods are sold.

FOB Shipping Point

A term indicating that the buyer of goods takes ownership and is responsible for the freight charges at the time the goods leave the seller's shipping point.

Estimated Method

The estimated method is an accounting technique used to approximate the value of certain items or financial outcomes when exact figures are unavailable or impractical to determine.

Natural Disaster

A major adverse event resulting from natural processes of the Earth, such as floods, hurricanes, earthquakes, or volcanic eruptions, that can cause significant damage or loss of life.