Which type of analysis could reveal that a company is relying heavily on debt financing?
A)Common size statements.
B)Horizontal analysis.
C)The asset turnover ratio.
D)Trend analysis.

Question

Quizplus · Accepted Answer

Common size statements express each item on a financial statement as a percentage of a base figure, such as total assets or sales, allowing for easy comparison of financial data. This can reveal a company's reliance on debt by showing the proportion of liabilities to total assets.

Which Type of Analysis Could Reveal That a Company Is