Which of the following ratios appears on a common-size balance sheet? I. Debt to asset ratio II. Net working capital to total as

Question

3 years ago

8

sets III. Net profit margin

1 answer:

Mekhanik [1.2K] · Answer 1 · 2022-05-13T05:26:59+03:00

Answer:

The answer is I, II

Explanation:

Common-size ratio is a way of expressing each line item of a financial statement as a percentage of a selected line item.

For income statement, each line item is expressed as a percentage of net sales or revenue.

For balance sheet, each line item is expressed as a percentage of total assets.

Both I and II are correct because they are expressed as a percentage of total assets and it is a balance sheet

III is wrong because net profit margin is expressed as a percentage of sales