A Useful Tool in Financial Statement Analysis Is the Common-Size

question 47

Multiple Choice

A useful tool in financial statement analysis is the common-size financial statement.What does this tool enable the financial analyst to do?

• A) Evaluate financial statements of companies within a given industry of approximately the same value.
• B) Determine which companies in the same industry are at approximately the same stage of development.
• C) Ascertain the relative potential of companies of similar size in different industries.
• D) Compare the mix of assets,liabilities,capital,revenue,and expenses within a company over time or between companies within a given industry without respect to relative size.

---

Definitions:

Firm's Product

The goods or services produced by a firm, designed to meet consumer needs or desires, distinguishing the firm in its market.

Frictional Unemployment

Short-term unemployment that arises from the process of matching workers with jobs.

Workers Equally Well Suited

A situation in which workers possess the same skills and abilities, making them interchangeable in their roles without affecting productivity.

Structural Unemployment

A form of unemployment caused by a mismatch between the skills that workers in the economy can offer and the skills demanded by employers.