Finanial Statement Analysis, Planning, and Growth.docVIP

CHAPTER 16 Financial Statement Analysis, Planning, and Growth Multiple Choice Questions: I. DEFINITIONS COMMON-SIZE STATEMENTS 1. A _____ standardizes items on the income statement and balance sheet as a percentage of total sales and total assets, respectively. a. tax reconciliation statement b. statement of standardization c. statement of cash flows d. common-base year statement e. common-size statement FINANCIAL RATIOS 2. Relationships determined from a firm’s financial information and used for comparison purposes are known as: a. financial ratios. b. comparison statements. c. dimensional analysis. d. scenario analysis. e. solvency analysis. CURRENT RATIO 3. The current ratio is measured as: a. current assets minus current liabilities. b. current assets divided by current liabilities. c. current liabilities minus inventory, divided by current assets. d. cash on hand divided by current liabilities. e. current liabilities divided by current assets. QUICK RATIO 4. The quick ratio is measured as: a. current assets divided by current liabilities. b. cash on hand plus current liabilities, divided by current assets. c. current liabilities divided by current assets, plus inventory. d. current assets minus inventory, divided by current liabilities. e. current assets minus inventory minus current liabilities. CASH RATIO 5. The cash ratio is measured as: a. current assets divided by current liabilities. b. current assets minus cash on hand, divided by current liabilities. c. current liabilities plus current assets, divided by cash on hand. d. cash on hand plus inventory, divided by current liabilities. e. cash on hand divided by current liabilities. LONG-TERM SOLVENCY RATIOS b 6. Ratios that measure a firm’s financial leverage are known as _____ ratios. a. asset management b. long-term solvency c. short-term solvency d. profitability e. market value TOTAL DEBT RATIO 7 The financial ratio measured as total assets minus total equity, divided