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glamorous

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tT
发表于 2011-7-13 14:10 | 只看该作者

Common-sized Income Statements

material, number, effective, better
Why does the material say that looking at the effective tax rate is better than looking at the common-sized number for presenting Income Tax Expense?

 

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ramzes

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发表于 2011-7-13 14:10 | 只看该作者
because the CS % is from revenues, not EBT

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spartanag07

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发表于 2011-7-13 14:10 | 只看该作者
Just going to elaborate a bit on what js said.

For taxes you are interested in the percentage of earnings before tax that the company is paying out in taxes (effective tax rate), not the percentage of sales that it pays out as taxes (which is what a common-size percentage based on revenues indicates).

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Benjiko

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发表于 2011-7-13 14:10 | 只看该作者
Thanks guys. Very clear explanation.

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