The common-size percent is computed by: Multiple Choice

a. Dividing the analysis amount by the base amount and multiplying the result by 100.

b. Dividing the analysis amount by the base amount.

c. Dividing the base amount by the analysis amount and multiplying the result by 1,000.

d. Subtracting the base amount from the analysis amount and multiplying the result by 100.

e. Dividing the base amount by the analysis amount.

Question

Business

Maeve Cannon

3 December, 04:34

The common-size percent is computed by: Multiple Choice

a. Dividing the analysis amount by the base amount and multiplying the result by 100.

b. Dividing the analysis amount by the base amount.

c. Dividing the base amount by the analysis amount and multiplying the result by 1,000.

d. Subtracting the base amount from the analysis amount and multiplying the result by 100.

e. Dividing the base amount by the analysis amount.

+4

Answers (1)

Know the Answer?

Freddy Richard · Answer 1

a. Dividing the analysis amount by the base amount and multiplying the result by 100.

Explanation:

Common size analysis is a method of comparing either financial statements of companies of various sizes or financial statements of a company, for different periods of time. It achieves these comparisons by measuring a portion of the company's financial operations against all of the operations. By doing this, common size analysis reduces the number of premiums to percentages that allow much easier comparison between companies and over time. This method of analysis can be performed on any of the income statements or balance sheets, but it is only as accurate as the accounting practices used to arrive at the numbers.

Therefore, for the calculation, you must divide the analysis quantity by the base quantity and multiply the result by 100 in order to transform it into a percentage.