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To convert an income statement to a common-size income statement, each line item should be stated...

To convert an income statement to a common-size income statement, each line item should be stated as a percentage of:

pretax income.

revenue.

net income.

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Answer #1

The correct option is revenue.

Each item such as expense,pretax income,net income etc. is represented as a % of net revenue.Such common-size income statement is then used by managers for comparison purposes;evaluation purpose etc.

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