Question

Fractions or percentages computed by dividing one account or line-item amount by another are called a.returns. b.industry averages. cmon-size statements. d.dividend yields. e.ratios.

Answer 1

Answer:

Common size statements

Explanation:

A common size statement is when line items in a financial statement are shown as percentages of a common base figure. For example, line items are shown as percentages of value of revenue in the income statement.

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Answer 2

Answer: c. Common size statements

Explanation: common size statements play a major role in analyzing a firm's performance over a range of periods. This can help in comparing the firm's performance over with varying sales figures as well as with competitors in the industry and also assist investors spot trends that may not be obvious in a standard financial statement.

The statement is also known as a vertical analysis and is defined as Common size, or vertical analysis, is defined as a tool used by financial managers to evaluate financial information by expressing one account or line-item amount in a financial statement as an easily comparable amount measured by percentage for the same time period

Thus income statement items are expressed as a percentage of net sales and balance sheet items as a percentage of total assets/liability/shareholders' equity.