Comparing firms using a common-size balance sheet rests on the assumption that

Question

a. the size or scale of a business does not affect the relation between a given balance sheet item and total assets.
b. the size or scale of a business does affect the relation between a given balance sheet item and total assets.
c. the large purchaser can negotiate better terms, including lower per-unit prices.
d. more negotiating power would appear on the large purchaser's balance sheet as proportionately smaller amounts reported for inventory relative to the amounts reported by a smaller purchaser with less negotiating power.
e. more negotiating power would appear on the large purchaser's balance sheet as proportionately larger amounts reported for accounts payable relative to the amounts reported by a smaller purchaser with less negotiating power.

Answer 1

A