Asked by Diana Morrissey on May 02, 2024
Verified
A common-size financial statement is a vertical analysis in which each financial statement account is expressed as a percentage.
Common-Size Financial Statement
A financial statement that expresses each line item as a percentage of a base figure, facilitating comparative analysis.
Vertical Analysis
Vertical analysis is a financial statement analysis method where each entry for each of the three categories of accounts (assets, liabilities, and equity) in a balance sheet is represented as a proportion of the total account.
- Recognize common-size financial statements as a tool for vertical financial analysis.
Verified Answer
OS
Olivia SartorioMay 06, 2024
Final Answer :
True
Explanation :
A common-size financial statement compares each line item on a financial statement as a percentage of a base amount, typically total assets or total revenue. This allows for easier comparison between companies of different sizes or within the same company over time.
Learning Objectives
- Recognize common-size financial statements as a tool for vertical financial analysis.