A common size analysis of the balance sheet is most likely to signal investors that:
A)the company is collecting receivables faster.
B)the company has increased sales.
C)the company is using assets efficiently.
D)the company is becoming more leveraged.

Question

Quizplus · Accepted Answer

A common size analysis of the balance sheet involves expressing each item as a percentage of a total, such as total assets or total liabilities, which can reveal changes in the company's capital structure, including its leverage. It does not directly indicate changes in receivables collection, sales, or asset efficiency.

A Common Size Analysis of the Balance Sheet Is Most