Common Size Financial Statements Convert Figures to a Common Size

question 18

Multiple Choice

Common size financial statements convert figures to a common size by:

• A) dividing balance sheet items by total assets and income statement items by net income.
• B) dividing balance sheet items by net sales and income statement items by net income.
• C) dividing balance sheet items by total assets and income statement items by net sales.
• D) dividing balance sheet items by net sales and income statement items by total assets.
• E) dividing balance sheet items by total equity and income statement items by net sales.

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Definitions:

Unissued Stock

Unissued stock refers to shares that have been authorized in a company's charter but have not yet been sold or distributed to shareholders.

Shares

Units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends.

Book Value

The value of an asset as recorded on the company's balance sheet, calculated as the cost of the asset minus any depreciation.

Outstanding Bonds

Bonds issued by a company that are currently still held by investors and have not yet been redeemed.