Which of the following would be most helpful in the comparison of different size companies?
A)Horizontal analysis
B)Comparison of their net incomes
C)Comparison of their working capital balances
D)Preparation of common-size financial statements

Question

Quizplus · Accepted Answer

Preparation of common-size financial statements would be most helpful in the comparison of different size companies. Common-size financial statements allow for the comparison of companies of different sizes by presenting financial information as a percentage of a common base. This allows for easier identification of trends and differences between companies. Horizontal analysis could also be helpful, but it would only show changes over time within a single company, not between different companies. Comparing net incomes and working capital balances would not be as helpful since these figures are affected by a company's size and industry.

Which of the Following Would Be Most Helpful in the Comparison