Question : Which one of the following are correct in connection with the Common Size Statement?
(A) Expressed as a percentage on revenue from operation
(B) Horizontal analysis
(C) Vertical analysis
(D) Expressed as a percentage on total assets
Choose the correct answer from the options given below:
Option 1: (A), (B) and (D) only
Option 2: (A), (B) and (C) only
Option 3: (A), (C) and (D) only
Option 4: (B), (C) and (D) only
Correct Answer: (A), (C) and (D) only
Solution : A common-size statement is a financial statement where each item is presented as a percentage of a base value, typically total assets or total liabilities and equity. Common size statements are connected in the following manner: 1. Expressed as a percentage on revenue from operation, 2. Vertical analysis, 3. Expressed as a percentage on total assets.
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