Common-size statements ________.
A) allow the users to compare numbers in relative terms rather than absolute amounts
B) report dollar amounts and percentages
C) create a dollar value bias
D) show the same percentages that appear in a horizontal analysis

Question

Quizplus · Accepted Answer

Common-size statements convert dollar amounts on financial statements into percentages, allowing users to compare numbers in relative terms rather than absolute amounts. This eliminates biases based on differences in the size of companies or differences between industries.

Common-Size Statements ________