This week I studied how financial statements are used to analyze the performance of an organization, including using trend analysis, ratio analysis, and benchmarking. We also focused on the statement of cash flows in our readings.

1. What is meant by "presentation of financial statement information in common-size amounts rather than dollar amounts?

2. Why is this type of presentation sometimes more meaningful than the use of actual dollar amounts?

3. Why is a trend just as important if not more important than information that pertains to only one year?