When Analyzing a Balance Sheet

Multiple Choice

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.