I. A common-size balance sheet shows the firm's assets and liabilities as a percentage of net sales. II. The average collection period is the average number of days an accounts receivable remains outstanding.

III. If a firm wishes to retain the same return on equity when its net profit margin and total asset turnover has declined, it must decrease its equity multiplier. IV. An average collection period far above the industry norm may indicate that the firm's credit policy is hurting sales by restricting credit to the very best customer.

A. III & IV

B. II

C. I & III