When analyzing a balance sheet
A)one looks for a reasonable match between the nature and mix of assets and mix of liabilities plus shareholders' equity.
B)the proportion of short-term versus long-term financing should match the proportion of current assets versus noncurrent assets.
C)the mix of long-term debt versus shareholders' equity should reflect the degree of operating risk.
D)Answers a, b, and c are correct.
E)None of these answer choices is correct.

Question

Quizplus · Accepted Answer

When analyzing a balance sheet, one should look for a reasonable match between the nature and mix of assets and mix of liabilities plus shareholders' equity (A), the proportion of short-term versus long-term financing should match the proportion of current assets versus noncurrent assets (B), and the mix of long-term debt versus shareholders' equity should reflect the degree of operating risk (C). Therefore, the correct answer is D, as all three options are correct.

When Analyzing a Balance Sheet