Question

In Common size Balance Sheet, percentage of various items is expressed as a percentage of:

• A. Total Assets
• B. Capital Employed
• C. Net profit before tax
• D. None of these

Hint:

Common-size financial statements present items as a percentage of total assets to enable meaningful comparisons regardless of company size.

Answer 1

The Correct Option is A

In a common size balance sheet, each asset and liability is represented as a percentage of total assets. This approach standardizes financial statements, enabling straightforward comparisons between entities of varying sizes and over different timeframes by eliminating size discrepancies. It aids analysts in assessing the proportional significance of each element within the overall financial makeup.