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1 .The percentage analysis of increases and decreases in individual items in comparative financial statements is called a.| vertical analysis|
b.| solvency analysis|
c.| profitability analysis|
d.| horizontal analysis D|

2.Which of the following below generally is the most useful in analyzing companies of different sizes a.| comparative statements|
b.| common-sized financial statements |
c.| price-level accounting|
d.| audit report|

B

3.The percent of fixed assets to total assets is an example of a.| vertical analysis|
b.| solvency analysis|
c.| profitability analysis|
d.| horizontal analysis|

A

4.What type of analysis is indicated by the following?

| | | Increase (Decrease*)  |
| 2011| 2010| Amount| Percent|
Current assets| $   380,000| $   500,000| $120,000*| 24%*| Fixed assets| 1,680,000| 1,500,000| 180,000  | 12%  |

a.| vertical analysis|
b.| horizontal analysis|
c.| liquidity analysis|
d.| common-size analysis|

B

5.An analysis in which all the components of an income statement are expressed as a percentage of net sales is called a.| vertical analysis|
b.| horizontal analysis|
c.| liquidity analysis|
d.| common-size analysisA|

6. A balance sheet that displays only component percentages is called a.| trend balance sheet|
b.| comparative balance sheet|
c.| condensed balance sheet|
d.| common-sized balance sheet|

D

7. One reason that a common-size statement is a useful tool in financial analysis is that it enables the user to a.| judge the relative potential of two companies of similar size in different industries.| b.| determine which companies in a single industry are of the same value.| c.| determine which companies in a single industry are of the same size.| d.| make a better comparison of two companies of different sizes in the same industry.|

D

8. Under which of the following cases may a percentage change be computed? a.| There is no amount in the base year.|
b.| There is a negative amount in the base year and a negative amount in the subsequent year.| c.| The trend of the amounts is decreasing but all amounts are positive.| d.| There is a negative amount in the base year and a positive amount in the subsequent year.|

C

9.In a common size balance sheet, the 100% figure is:

a.| Ototal property, plant and equipment.|
b.| total current assets.|
c.| total liabilities.|
d.| ttotal assets.|

ANS:D

10.Horizontal analysis is a technique for evaluating financial statement data

a.| for one period of time.|
b.| over a period of time.|
c.| on a certain date.|
d.| as it may appear in the future.|

ANS:B

11.In performing a vertical analysis, the base for cost of goods sold is a.| total selling expenses.|
b.| net sales.|
c.| total expenses.|
d.| total revenues.|

ANS:B

12.A company with working capital of $500,000 and a current ratio of 2.5 pays a $85,000 short-term liability. The amount of working capital immediately after payment is a.| $585,000|
b.| $415,000|
c.| $500,000|
d.| $85,000|

ANS:C

13.Which of the following is a measure of the liquid position of a corporation? a.| earnings per share|
b.| inventory turnover|
c.| current ratio|
d.| number of times interest charges earned|

ANS:C

14.Which of the following is not included in the computation of the quick ratio? a.| inventory|
b.| marketable securities|
c.| accounts receivable|
d.| cash|

ANS:A

15.The numerator used to calculate accounts receivable turnover is a.| total sales|
b.| net sales|
c.| accounts receivable at...
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