Using Common-Size Balance Sheet Percentages to Project Individual Assets, Liabilities

question 24

Multiple Choice

Using common-size balance sheet percentages to project individual assets, liabilities, or shareholders' equity has all of the following shortcomings except :

• A) Individual assets, liabilities, and shareholders' equity are not independent of each other.
• B) If a company experiences changing proportions for investments in securities among its assets, other asset categories may show decreasing percentages in some years even though their dollar amounts are increasing.
• C) Individual assets, liabilities, and shareholders' equity are independent of each other.
• D) The common-size percentages do not permit the analyst to easily change the assumptions about the future behavior of an individual asset or liability.

---

Definitions:

Indian

A term referring to people from India or, historically and controversially, used to describe Indigenous peoples of the Americas.

Category

A classification or grouping based on shared characteristics or attributes.

Indian Allotment Act

Refers to several U.S. laws that allowed for the division of tribal lands into individually owned parcels, significantly impacting Indigenous sovereignty and land ownership.

Intentions

Plans or objectives that one intends to accomplish or achieve, reflecting a person's motivation and purpose.