One Reason That a Common-Size Statement Is a Useful Tool

question 114

Multiple Choice

One reason that a common-size statement is a useful tool in financial performance evaluation is that it enables the user to

• A)make better comparisons of two companies of different sizes in the same industry.
• B)determine which companies in a single industry are of the same size.
• C)judge the relative potential of two companies of similar size in different industries.
• D)determine which companies in a single industry are of the same value.

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Definitions:

Trade Promotion

Marketing activities executed by manufacturers or wholesalers aimed at increasing demand for products among retailers, distributors, or other resellers.

Case Allowance

A discount or rebate offered to retailers or wholesalers that purchase a specific quantity of product within a specified timeframe.

Promotional Period

A defined time during which a product or service is offered at a discounted rate or with special incentives to stimulate sales or awareness.

Cooperative Advertising

Advertising programs whereby a manufacturer pays a percentage of the retailer’s local advertising expense for advertising the manufacturer’s products.