A useful tool in financial statement analysis is the common-size financial state

Question

A useful tool in financial statement analysis is the common-size financial statement. What does this tool enable the financial analyst to do?
a. Evaluate financial statements of companies within a given industry of approximately the same value.
b. Determine which companies in the same industry are at approximately the same stage of development.
c. Ascertain the relative potential of companies of similar size in different industries.
d. Compare the mix of assets, liabilities, capital, revenue, and expenses within a company over time or between companies within a given industry without respect to relative size.

Explanation / Answer

d. Compare the mix of assets, liabilities, capital, revenue, and expenses within a company over time or between companies within a given industry without respect to relative size.

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