Which of the following is the best reason to use a common-size analysis?
A)To change financial information in different currencies into a common currency.
B)To evaluate a company relative to its competitors.
C)To calculate trend percentages.
D)To assess nonfinancial measures of performance.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

The best reason to use a common-size analysis is to evaluate a company relative to its competitors. Common-size analysis helps to standardize financial statements and make them more comparable across different companies. By using percentages to express each line item, it becomes easier to compare and contrast the financial performance of different companies regardless of their size, industry, or geographic location.

Which of the Following Is the Best Reason to Use