Common-Size Financial Statements

question 73

Multiple Choice

Common-size financial statements:

• A) are a specialised application of ratio analysis.
• B) allow us to make meaningful comparisons between the financial statements of two companies that are different in size.
• C) are prepared by having each financial statement item expressed as a percentage of some base number, such as total assets or total revenues.
• D) All of the above are true.

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Definitions:

April Futures Price

The April Futures Price refers to the agreed-upon price set in a futures contract for the delivery of a specific commodity, financial instrument, or currency in April.

S&P 500 Index

An index of the American stock market reflecting the value of 500 large-cap companies with shares available on either the NYSE or NASDAQ.

Open Interest

The total number of outstanding derivative contracts, such as options or futures, that have not been settled.

Clearinghouse Positions

The role of a clearinghouse in ensuring the settlement of transactions by acting as an intermediary between buyers and sellers in the financial markets.