Which of the following is an advantage of a common-size balance sheet?
A) It is very useful to assess how effectively a firm collected its accounts receivable.
B) It reveals a great deal of information about how the firm is controlling its expenses.
C) It can tell the shareholders how dividends have changed over time.
D) It reveals how the firm has managed its tax payments.

Question

Quizplus · Accepted Answer

A common-size balance sheet, which expresses each item as a percentage of a base amount (such as total assets), is particularly useful for assessing how effectively a firm is managing its accounts receivable by comparing this percentage over time or against industry benchmarks.

Which of the Following Is an Advantage of a Common-Size