Directions: Read each sentence carefully and detemine whether the statement is TRUE or FALSE. Writeyour answers onthe space provided before each number.1. Profitability ratios measure the ability of the company's assets and invested capital togenerate sales.2. Čunent ratio is generally higher than quick ratio.3. Using anothercompany as benchmark, the company with highernet profitmarginis moreprofitable.4. Accounts receivable turnover measures the number of days in the company's averagecollections period.5. Firancial statement analysis uses computational and analytical techniques to evaluate thecompany's risks, performance, financial health, and future prospects with the objectiveof making economic decisions.- 6. Given equal gross profit margin, the company with the better operating income marginhas higher operating expenses as a percentage of sales.7. Debt to equity ratio measures the percentage of assets financed by equity.8. Gross profit margin provide an indication of the company's average pricing policy.9. Retum on asset is an asset management ratio.10. All tumover ratios uses net sales figure as numerator.

Accounting ratios refers to those ratios which compare the line items of the financial statements…

your answers onthe space provided before each number. 1. Profitability ratios measure the ability of the company's assets and invested capital to generate sales. 2. Čument ratio is generally higher than quick ratio. 3. Using aother company as benchmark, the company with highernet profit marginis more profitable.

your answers onthe space provided before each number. 1. Profitability ratios measure the ability of the company's assets and invested capital to generate sales. 2. Čument ratio is generally higher than quick ratio. 3. Using aother company as benchmark, the company with highernet profit marginis more profitable.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter13: Financial Statement Analysis

Section: Chapter Questions

Problem 13.1KTQ

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