Question
Why do analysts use a common-size balance sheet instead of only raw dollar amounts?
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Answer
It reveals asset composition and financing structure across firms or periods.
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Question
If the current ratio rises, what does it typically signal?
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Answer
Improved short-term liquidity and lower near-term payment risk.
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Question
If the current ratio rises, what does that typically signal about short-term liquidity?
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Answer
Improved ability to cover current liabilities.
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Question
Why is common-size balance sheet analysis useful across firms or over time?
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Answer
It standardizes size, making composition changes easier to compare.
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