A financial statement that shows each line item as a percentage of one key item on the statement is referred to as:
A)benchmarking.
B)common-size statement.
C)horizontal analysis.
D)financial ratio analysis.

Question

Quizplus · Accepted Answer

A common-size statement, also known as a vertical analysis, represents each line item on a financial statement as a percentage of a key item, such as revenue or total assets. This allows for easy comparison of different companies or different time periods within the same company. Benchmarking involves comparing a company's performance to that of its competitors or industry standards, while horizontal analysis compares changes in financial data over time. Financial ratio analysis involves calculating and analyzing various ratios to assess a company's financial health.

A Financial Statement That Shows Each Line Item as a Percentage