Which of the following statements regarding the current ratio is true? a.The current ratio is more useful than working capital in making comparisons across companies. b.The current ratio is not useful in making comparisons with industry averages. c.Working capital is more useful than the current ratio in making comparisons across companies. d.All of these statements are true.

Which of the following statements regarding horizontal analysis is not true? a. It can be useful in interpreting the financial performance of a company. b. The amount of each item on a current financial statement is compared to the same item on an earlier statement. c. In horizontal analysis, the earlier year is used as the base year for calculating percentage changes. d. Each item on a current financial statement is compared to the same item on a competitor's statement.

Stating an income statement in a common size format allows users to evaluate a firm’s performance in comparison to that of its competitors.   True False

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.

4. According to the basic DuPont equation, a firm's ROE is the product of what other two ratios? a. net profit margin and the equity multiplier b. ROA and the equity multiplier C. net profit margin and return on equity d. net profit margin and total asset turnover

Which of the following is NOT a type of ratio analysis used by managers to interpret the numbers in financial statements? O liquidity O operating O activity O profitability

ratio of net income to equity is also known as: Total net equity ratio Profit margin Return on equity Net income ratio None of these are correct.

Which of the following statements are true about the interest-burden ratio? Check all that apply: It can be expressed as EBIT/Interest Expense. If the company has no financial leverage, the interest-burden ratio will be equal to 0. A company with higher financial leverage will have a lower interest-burden ratio. If the company has no financial leverage, the interest-burden ratio will be equal to 1. It can be expressed as Net profits/Pretax profits.

Which of the following are not part of the components ofthe DuPont system for measuring and evaluating businessperformance?a. Return on sales.b. Residual income.c. Return on investment.d. Capital turnover.e. Number of patents.