The common size statement requires ________. (Fill in the blank by choosing correct option)
1) choose of common base
2) journal entries
3) cash & flow
4) current ratio
Answers
Answer:
The correct option is 4, i.e. current ratio.
According to this option, The common size statement requires CURRENT RATIO.
Explanation:
For further understanding of this fill in the blank, current ratio can be defined. This is one of the types of liquidity ratios.
It measures the ability of a business/organization/company to pay its short term loans.
The time limit is short term, so usually the dues have to be paid within a year.
This ratio comes in handy when telling investors ways of making use of more assets and less liabilities.
Answer:
CURRENT RATIO
Explanation:
Some info-bits about the common size statement & current ratio,
Common Size Ratio:
- Every item in this statement is expressed as a percentage of the base sales.
- It is a type of vertical analysis.
Current Ratio:
The firm's liquidity which helps to cater to the debts and other payable for a short time i.e one year or less. It helps stockholders & investors as to how quickly a firm can maximize their assets.