Study Unit 1.1: Common Size Financial Statements Flashcards

1
Q

Purpose of Common-Size financial Statements

A

Common-size financial statements restate financial statement line items in terms of percentages of a given amount so that the financial statements of steadily growing firms and firms of different sizes can be Common-size financial statements restate financial statement line items in terms of percentages of a given amount so that the financial statements of steadily growing firms and firms of different sizes can be analyzed and compared. analyzed and compared.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Define Capital Structure

A

A firm’s capital structure includes its sources of financing, both long- and short-term. The sources of financing may be either in the form of debt (external financing) or equity (internal financing).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Define operating leverage.

A

Leverage is the relative amount of fixed cost in a firm’s overall cost structure.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly