Common-size financial statements are infrequently used by financial analysts as they do not compare the financial statement results of one company with average statistics for companies in the same industry.

Question

Quizplus · Accepted Answer

Common-size financial statements are actually very useful for financial analysts as they standardize the financial statement data and allow for easy comparison between companies within the same industry. The percentages for each line item can be compared to industry averages or benchmarks to identify strengths and weaknesses.

Common-Size Financial Statements Are Infrequently Used by Financial Analysts as They