Purpose of Common-Size Statements

Very Easy Analysis Techniques Common-size Statements

Common-size statements are financial reports that represent line items as a percentage of a base figure. This technique allows for easier comparison across different time periods or entities of varying sizes. Which of the following statements is true regarding the purpose of common-size statements?

Common-size statements are used exclusively for internal management accounting.

Common-size statements facilitate comparison of financial performance between companies of different sizes.

Common-size statements focus solely on cash flow analysis.

Hint

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