You are comparing the liquidity ratios for many firms that operate in the same industry. If you compare these ratios for the largest firms in the industry to the same ratios for the smallest firms in the industry you should expect to find that ________.

A.

larger firms tend to operate with lower liquidity ratios compared with smaller firms because larger firms have better access to outside financing, such as bank loans and credit lines, that they can rely on during business downturns

B.

there is usually not much difference between the liquidity ratios of large and small firms because the whole point of using ratios is to focus on a relative comparison when looking at firms that vary greatly in size

C.smaller firms tend to operate with lower liquidity ratios compared with larger firms because small firms rely more heavily on

shortterm

sources of financing

D.

larger firms tend to operate with higher liquidity ratios compared with smaller firms because larger firms need to accumulate much larger cash balances to survive when business conditions deteriorate