If an analyst wishes to compare several different companies that vary in size,which of the following types of financial statement analysis would be used?
A)Common-size financial statement analysis
B)Vertical analysis
C)Horizontal analysis
D)Ratio analysis

Question

Quizplus · Accepted Answer

Common-size financial statement analysis involves converting all financial statement line items into percentages relative to a common base (such as sales or total assets). This allows for easy comparison of companies of different sizes and can highlight differences in operational efficiency, profitability, and financial structure. Vertical analysis is a similar technique but only compares line items within a single year's financial statements. Horizontal analysis compares line items across multiple years but does not adjust for company size differences. Ratio analysis also compares line items across multiple years but typically requires adjustment for size differences using financial ratios.

If an Analyst Wishes to Compare Several Different Companies That