To create a common-size balance sheet for a firm one would typically divide each item on the balance sheet by:
A)total assets.
B)total equity.
C)net sales.
D)total liabilities.

Question

Quizplus · Accepted Answer

Dividing each item on the balance sheet by total assets will convert the values into percentages, making it easier to compare the relative size of different categories and analyze changes over time.

To Create a Common-Size Balance Sheet for a Firm One