Which of the following is NOT true of common size statements?
A) All balance sheet figures are expressed as a percentage of total assets.
B) All figures in the income statement are expressed as a percentage of operating profit before tax.
C) Common size statements enable trends over time for a single company to be detected.
D) Common size statements assist in comparing companies of different sizes.

Question

Quizplus · Accepted Answer

Common size statements express figures as a percentage of a common base, such as total assets for balance sheet figures and net sales for income statement figures. However, the percentage used for income statement figures is typically revenue or net sales, not operating profit before tax.

Which of the Following Is NOT True of Common Size