CFA Practice Question

CFA Practice Question

Which of the following is incorrect?
A. A common-size balance sheet lists all balance sheet accounts as a percentage of total assets.
B. The 'current ratio' is the ratio of current assets to current liabilities.
C. A common-size income statement lists all balance sheet accounts as a percentage of net income.
Explanation: A common-size income statement lists all income statement items as a percentage of sales. Net Income is not suitable as a denominator as it could be small, negative or even zero.

User Contributed Comments 1

User Comment
namuhama doesn't CS balance sheet account as percentage of total asset / total lib+equity ?

Divides into two account and find the proportion percentage?
You need to log in first to add your comment.