The use of common-size analysis makes comparisons more meaningful because percentages eliminate the effects of size.

Question

Quizplus · Accepted Answer

Common-size analysis expresses financial statement items as a percentage of a common base, such as total assets or total sales. By doing so, it eliminates the effects of size and enables meaningful comparisons between companies or over time. Therefore, the statement is true.

The Use of Common-Size Analysis Makes Comparisons More Meaningful Because