Vol. 3 Common-Size Analysis

Question 1

Common-size analysis of the income statement can be performed by …..

Answer 1

stating each line item on the income statement as a percentage of revenue. Common-size analysis generally refers to vertical common-size analysis

Question 2

Vertical common-size analysis

Answer 2

it is specific form of what is referred when referencing common-size analysis in the general sense. Otherwise, horizontal common-size analysis is used

Question 3

Horizontal common-size analysis

Answer 3

a common-size analysis that states items in relation to a selected base year value

Question 4

Vertical common-size analysis of the income statement is particularly useful in ___________

Answer 4

cross-sectional analysis

Question 5

Cross-sectional analysis

Answer 5

Comparing companies with each other for a particular time period or comparing a company with industry or sector data