Question

The statements which are useful both in intra firm comparison over different years and also in inter firm comparison for the same year or for several years are known as ______.

Options

• Comparative statement

• Common size statement

• Income statement

• Cash flow statement

Answer 1

The statements which are useful both in intra firm comparison over different years and also in inter firm comparison for the same year or for several years are known as common size statement.

Explanation:

Common-size statements are ideal for both intra-firm and inter-firm comparisons because they convert financial data into percentages. By using a common base (like Net Sales), they remove the bias of a company’s size, allowing you to compare a small firm directly with a large one. This “percentage-only” approach also makes it easy to track internal trends and structural changes in costs or assets over multiple years.