Which of the following best describes trend analysis? A comparing a company's financial statements with that of other companies B expressing each financial statement amount as a percentage of a budgeted amount C expressing each year's financial statement amounts as a percentage of the base year amounts D calculating key ratios to evaluate performance

Which of the following best describes trend analysis? A comparing a company's financial statements with that of other companies B expressing each financial statement amount as a percentage of a budgeted amount C expressing each year's financial statement amounts as a percentage of the base year amounts D calculating key ratios to evaluate performance

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 11P

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Which of the following best describes horizontal analysis? A comparing a company's financial statements with other companies B calculating key ratios to evaluate performance C comparing financial statement amounts from year to year for the same company D expressing each financial statement amount as a percentage of a budgeted amount
The comparison of a company's financial condition and performance to a base amount is known as: a.Ratio analysis. b.Horizontal analysis. c.Vertical analysis. d.Trend analysis.
Which of the following income statement figures would probably be the best indicator of a company's future performance? a. Total revenues b. Income from operations c. Net income d. Gross profit
Which group of financial statement ratios best captures what investors think of a company’s past performance and future prospects? a. Cash flow ratios b. Liquidity ratios c. Asset management ratios d. Market value ratios e. Profitability ratios
1. What are some of the tests of a sound or healthy long-term financial position? 2. Give some indications of managerial efficiency in the use of company resources. 3. What are the most commonly used techniques in the analysis and interpretation of financial statements? 4. What are the steps involved in using trend percentages in financial analysis? 5. Distinguish between horizontal and vertical analysis of financial statement data 6. What is the basic objective in looking at trends in financial ratios and other data? 7. Define trendpercentages 8. Discuss the steps in analyzing financial statements using trend percentages. 9. In financial statement analysis, what is the basic objective of observing trends in data and ratios? Suggest some other standards of comparison. 10. Distinguish between trend percentages and component percentages. 11. Which would be better suited for analyzing the change in sales over a term of several years? 12. Nets sales of the Premiere General Store have been…
1. In financial statement analysis, what is the basic objective of observing trends in data and ratios? 2. Distinguish between trend percentages and component percentages. Which would be better suited for analyzing the change in sales over a term of several years?3. What is the quick ratio? Under what circumstances are short-term creditors most likely to regard a company’s quick ratio as more meaningful than its current ratio?4. Identify the ratios or other analytical tools used to evaluate profitability. Explain briefly how each is computed.5. Net sales of Major General Store have been increasing at a reasonable rate, but net income has been declining steadily as a percentage of these sales. What appears to be the problem?6. Why might earnings per share be more significant to a shareholder in a large corporation than the total amount of net income?7. ABC Co. has a current ratio of 3 to 1. Ono Corp. has a current ratio of 2 to 1. Does this mean that ABC’s operating cycle is longer than…
Which of the following ratios would NOT be considered to be a measure of a business economic performance? A.Return on assets B.Inventory days C.Return on equity D.Sales growth
5. Profitability ratios Profitability ratios help in the analysis of the combined impact of liquidity ratios, asset management ratios, and debt management ratios on the operating performance of a firm. Your boss has asked you to calculate the profitability ratios of Diusitech Inc. and make comments on its second-year performance as compared with its first-year performance. The following shows Diusitech Inc.'s income statement for the last two years. The company had assets of $4,700 million in the first year and $7,518 million in the second year. Common equity was equal to $2,500 million in the first year, and the company distributed 100% of its earnings out as dividends during the first and the second years. In addition, the firm did not issue new stock during either year. Diusitech Inc. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 2,540 2,000 1,610 1,495 127 80 1,737 803 80 723 181 542 Net Sales Operating costs except depreciation and…
Define current ratio and quick ratio. Discuss what the liquidity ratios reveal about the company financial health, including any description of trend analysis, benchmarks, standard measurements or other types of analysis used once the ratio amount is known.
Evaluate the company's perfomance and position using financial ratio analysis
If you want an indication of the direction a business is taking, you would usea. benchmarking.b. trend percentages.c. industry analysis.d. vertical analysis.
Define each of the following terms: d. Forecasted financial statement approach using percentage of sales

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A	comparing a company's financial statements with that of other companies
B	expressing each financial statement amount as a percentage of a budgeted amount
C	expressing each year's financial statement amounts as a percentage of the base year amounts
D	calculating key ratios to evaluate performance