EBK FINANCIAL ACCOUNTING THEORY AND ANA
12th Edition
ISBN: 9781119299646
Author: CATHEY
Publisher: JOHN WILEY+SONS,INC.-CONSIGNMENT
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Chapter 5, Problem 5.2C
a)
To determine
To state : Measures that may be used to assess the quality of firm’s reported earnings.
b)
To determine
To analyze : Quality of earnings of a large corporation.
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Students have asked these similar questions
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
The quality of earnings concept indicates thata. stockholders want the corporation to earn enough income to be able to pay its debts.b. net income is the best measure of the results of operations.c. continuing operations and one-time transactions are of equal importance.d. income from continuing operations is a more relevant predictor of future performancethan income from one-time transactions
1. What is an investor’s objective in financial statement analysis?
a. To determine if the firm is risky
b. To determine the stability of earnings.
c. To determine changes necessary to improve future performance
d. To determine whether or not an investment is warranted by estimating a company’s future earnings stream
2. The current ratio isa. calculated by dividing current liabilities by current assets.
b. used to evaluate a company's liquidity and short-term debt paying ability
c. used to evaluate a company's solvency and long-term debt paying ability.
d. calculated by subtracting current liabilities from current assets.
Chapter 5 Solutions
EBK FINANCIAL ACCOUNTING THEORY AND ANA
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