Ch 3 discussion note videos

Question 1

Common size balance sheets are what…

Answer 1

All accounts = percent of total assets (%TA)

Question 2

Common size income statements are what..

Answer 2

Each line item = % of sales or revenue (%SLS)

Question 3

Standardized statements are useful for ..

Answer 3

comparing financial information year to year

comparing companies of different sizes, particularly within the same industry

Question 4

Ratio Analysis is what..

Answer 4

allows for better comparison through tine or between companies

internally or externally

For each ratio ask yourself:

what the ratio is trying to measure?

why that information is important?