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Using common-size balance sheet percentages to project individual assets, liabilities, or
shareholders' equity has all of the following shortcomings except:
a. Individual assets, liabilities,
and shareholders' equity are
independent of each other.
b. The common-size
percentages do not permit the
analyst to easily change the
assumptions about the future
behavior of an individual asset
or liability.
c. Individual assets, liabilities,
and shareholders' equity are
not independent of each other.
d. If a company experiences changing
proportions for investments in securities among
its assets, other asset categories may show
decreasing percentages in some years even
though their dollar amounts are increasing.

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