- CFA Exams
- CFA Level I Exam
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 21. Understanding Income Statements
- Subject 8. Analysis of the Income Statement
CFA Practice Question
If an analyst is preparing common-size financial statements, the most appropriate way of expressing the interest expense is as a percentage of ______.
A. sales
B. total liabilities
C. total interest-bearing debt
Explanation: Interest expense is an income statement account and the common-size percentage should be computed as a percentage of sales for that company.
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