A Common Size Analysis of the Balance Sheet Is Most

question 8

Multiple Choice

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.

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Definitions:

Marginal Benefit

The supplementary enjoyment or advantage derived from consuming an extra unit of a good or service.

Marginal Cost

The amount of money needed to manufacture an extra unit of a good or service.

Diagram

A simplified drawing or plan that represents the essential features of something, often used for explanation or clarification.

Coase Theorem

A principle that asserts if trade in an externality is possible and there are no transaction costs, parties can negotiate to solve the problem privately.