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Question
Under which tool of financial analysis, 100% is taken as base and all other related amounts are expressed as a percentage of base?
Options
Comparative Statement
Common-size Statement
Ratio Analysis
Cash Flow Statement
MCQ
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Solution
Common-size Statement
Explanation:
A Common-size Statement is a vertical analysis tool where a major total is assumed to be 100% to act as a common base. Every other line item is then expressed as a percentage of that base, such as using Total Assets as the base in a Balance Sheet or Revenue from Operations in an Income Statement.
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