Dicussion pg 1331

Dicussion pg 1331 - When both these components are...

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[4] What is the Common-size Financial Statement? What are its Advantages? Financial statements standardized by a measure of size, either sales or total assets. All amounts are stated in terms of a percentage of size measure. (Book) Common-size financial statement- is a financial statement, which expresses the different values in form of percentage, (%). A common size financial statement helps in comparing two companies, which differ in size. (Simple Definition) Two components of the common size financial statement are: -Balance sheet -Income statement.
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Unformatted text preview: When both these components are alliance (group together), a common size financial statement is obtained *********Advantages ********* **More detailed statement (more information revealed) ** Percentage assets of any company can be compared to another company ** Removes any kind of bias, while comparing and analyzing companies ** Changes in different values pertaining to company's performance can also be ascertained during a particular period ** Used for predicting future trends and analyzing prevailing trends in the industry....
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