Asked by Elizabeth Hubbard on Apr 24, 2024
Verified
Common-size balance sheets may be used for all of the following except
A) gaining insights into the nature of a company's operations.
B) analyzing a company's asset and financial structure.
C) determining how management assesses the risks a company faces.
D) learning about the underlying economics of an industry.
Common-Size Balance Sheets
Financial statements that present all line items as percentages of a common base figure rather than absolute numerical figures, facilitating comparison.
Financial Structure
The mix of debt and equity that a company uses to finance its operations and growth.
Economics
The social science focused on the production, distribution, and consumption of goods and services.
- Analyze balance sheet data for decision making, including understanding liquidity and solvency.
Verified Answer
CA
Chinedu AjuruchiMay 02, 2024
Final Answer :
C
Explanation :
Common-size balance sheets are primarily used to analyze a company's asset and financial structure, gain insights into the nature of a company's operations, and learn about the underlying economics of an industry. However, they are not typically used to determine how management assesses the risks a company faces, making choice C the correct answer.
Learning Objectives
- Analyze balance sheet data for decision making, including understanding liquidity and solvency.