What Is Analysed by Common Size Analysis

question 1

Multiple Choice

What is analysed by common size analysis?

• A)Breakdown of the total revenue over differing business segments to enable comparison between those segments.
• B)The performance of other firms in the same industry adjusted for size of the firm
• C)Comparing the firms performance to its own history
• D)Performance of firms of similar size in differing industries

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Definitions:

Net Investment

The overall sum invested by a company or an economy in capital assets, with depreciation deducted.

Depreciation

Depreciation is an accounting method of allocating the cost of a tangible or physical asset over its useful life, representing how much of the asset's value has been used up.

Interest Rate

The cost of borrowing money, typically expressed as an annual percentage of the principal loan amount.

Marginal Efficiency

The expected profitability of investing in additional units of capital, influencing a firm's decision to invest based on future returns.