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:

Perfect Cube

A number that can be expressed as the cube of an integer.

Neither

Indicates a situation or condition where none of the specified alternatives or options apply.

Cube Roots

The number that when multiplied by itself twice gives the original number. Symbolically, the cube root of \(x\) is \(x^{1/3}\).

Perfect Cube

A value that represents the result of cubing an integer.