Common-Sized Balance Sheets

question 13

Multiple Choice

Common-sized balance sheets

• A) show data for companies in the same industry.
• B) show data for companies with approximately the same amount of assets.
• C) show each balance sheet account as a percentage of total sales.
• D) show each balance sheet account as a percentage of total assets.

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Definitions:

Noncash Assets

Assets that are not in the form of cash or easily convertible into cash, such as real estate, equipment, and patents.

Capital Deficiency

A situation where a company's liabilities exceed its assets, indicating financial distress.

Income Ratio

A financial metric that compares different types of income to a common base, such as net income to sales, to evaluate financial performance.

Cash Distribution

The process of distributing or paying out cash from a corporation to its shareholders, often in the form of dividends.