Question

A common-size income statement is useful for​

A common-size income statement is useful for​

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

A common size income statement is the one which shows everything as a percentage of value of sales. It’s uses are as follows:

  • It is used for analysis purposes within the entity.
  • It is used to compare different entities in same industry and in direct competition.
  • It is used to compare companies globally which use different currency.
  • It is used to compare entities in different industries or in indirect competition.
  • It is used to compare different projects or associate firms or suppliers or customers firms .
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Explain how to create a common size income statement and a common size balance sheet. Provide...
Explain how to create a common size income statement and a common size balance sheet. Provide at least three reasons why analysts find the creation of common size statements to be a useful practice.
Common-Size Income Statements Following is the income statement for Target Corporation. Prepare Target’s common-size income statement...
Common-Size Income Statements Following is the income statement for Target Corporation. Prepare Target’s common-size income statement for the fiscal year ended January 31, 2015. (Round your answers to one decimal place.) ($ millions) Fiscal year ended January 31, 2015 Sales revenue $72,618 Cost of sales 51,278 Selling, general and administrative expenses 14,676 Depreciation and amortization 2,129 Earnings from continuing operations before interest and income taxes 4,535 Net interest expense 882 Earnings from continuing operations before income taxes 3,653 Provision for...
Which of the following is NOT true of common-size income statements? Select one: a. Income statement...
Which of the following is NOT true of common-size income statements? Select one: a. Income statement accounts are represented as percentages of net sales. b. Common-size income statements analysis is a specialized application of ratio analysis. c. Each income statement item is standardized by dividing it by net sales. d. Each income statement item is standardized by dividing it by total assets.
Which of the following is an advantage of a common-size income statement? a.It can tell the...
Which of the following is an advantage of a common-size income statement? a.It can tell the analyst a great deal about a firm’s efficiency and profitability b. It reveals how effectively a firm has increased its assets c. It reveals a great deal of information about the adequacy of a firm’s net working capital d. It is very useful to assess how effectively a firm collected its accounts receivable.
Prepare a common-size income statement (component percentages) for the following income statement. Dollar Amount Sales revenue...
Prepare a common-size income statement (component percentages) for the following income statement. Dollar Amount Sales revenue $200,000 Cost of goods sold $80,000 Gross profit $120,000 Operating expenses $101,000 Interest expense $4,000 Income before income tax $15,000 Income tax expense (rate 20%) $3,000 Net income
Common-Size Income Statements Consider the following income statement data from the Ross Company: 2013 2012 Sales...
Common-Size Income Statements Consider the following income statement data from the Ross Company: 2013 2012 Sales revenue $525,000 $450,000 Cost of goods sold 336,000 279,000 Selling expenses 107,000 101,000 Administrative expenses 62,000 56,000 Income tax expense 9,800 7,400 Prepare common-size income statements for each year. Note: Round answers to one decimal place (ex: 0.2345 = 23.5%). ROSS COMPANY Common-Size Income Statements (Percent of Sales Revenue) 2013 2012 Sales Revenue Answer Answer Cost of Goods Sold Answer Answer Gross Profit on...
1. A common size financial statement is a useful tool in performance evaluation because it enables...
1. A common size financial statement is a useful tool in performance evaluation because it enables the user to: A.        compare one company’s performance in different periods. B.         evaluate the direction a business is taking over a longer period of time. C.         evaluate relationships between key components in the financial statements. D.        compare companies of different sizes in the same industry. 2.         Comparing one company against a competitor or against industry averages is called:             A.        benchmarking. B.         comparative analysis....
1. What three ratios of profitability appear on a common size income statement? 2. What would...
1. What three ratios of profitability appear on a common size income statement? 2. What would explain how a firm having a high gross profit margin and a low net profit margin? 3. A firm's ROE is typically not equal to its ROA. Why? When would a firm's ROA equal its ROE?
Express the following comparative income statements in common-size percents. Using the common-size percentages, which item is...
Express the following comparative income statements in common-size percents. Using the common-size percentages, which item is most responsible for the decline in net income? Express the following comparative income statements in common-size percents. (Round your percentage answers to 1 decimal place.) GOMEZ CORPORATION Comparative Income Statements For Years Ended December 31 Current Year Prior Year $ % $ % Sales $730,000 $640,000 Cost of goods sold 565,400 288,800 Gross profit 164,600 351,200 Operating expenses 128,000 261,200 Net income $36,600 $90,000...
A common size income statement analysis would show what figure for the following company: 2020 2019...
A common size income statement analysis would show what figure for the following company: 2020 2019 Net sales $678,500 $630,485 Cost of goods sold $195,000 $186,405 Gross margin $483,500 $444,080 Selling/administrative costs $115,000 $128,350 Operating income $368,500 $315,730 Income tax expense $73,700 $63,146 Net income $294,800 $252,584 A. 2020 operating income (as a percent of net sales) is 54.3% B. The change in gross margin is $39,420 C. The 2020 change in operating income is $52,770 D. The percent change...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT