A technique that is used in comparative analysis of financial statement is __________?
Correct answer: C. common size analysis
- A. graphical analysis
- B. preference analysis
- C. common size analysis
- D. returning analysis
Explanation
Common-size analysis expresses each financial statement item as a percentage of a base figure, such as sales or total assets, making statements easier to compare across periods or firms. The other listed terms are not standard financial-statement analysis techniques.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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