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Select the Term from the List Provided That Best Matches

Question 172

Matching

Select the term from the list provided that best matches each of the following descriptions or definitions:

Premises:

Responses:

An indication of the relative importance of an item of financial information

Absolute amounts

Analysis technique that compares amounts of the same item over two or more time periods

Book value per share

Measures of the long-term debt paying ability of the firm

Current ratio

Measure of profitability calculated by dividing net income by average total stockholders' equity

Horizontal analysis

Dollar amounts of individual items on financial statements can be misleading because they make no reference to the size of the company

Liquidity ratios

Measurements of a firms ability to generate income

Materiality

Study of the performance of ratios or other financial measures over time

Average days to sell inventory

Current assets divided by current liabilities

Price-earnings ratio

Measures of short-term debt paying ability

Profitability ratios

Measure to compare values of different stocks, calculated by dividing market price per share by amount of income per share

Return on equity

Another way at looking at inventory turnover by converting the inventory turnover ratio into a number of days

Solvency ratios

Calculated by dividing total stockholders' equity less preferred rights by the number of common shares outstanding

Trend analysis

Premises:

An indication of the relative importance of an item of financial information

Analysis technique that compares amounts of the same item over two or more time periods

Measures of the long-term debt paying ability of the firm

Measure of profitability calculated by dividing net income by average total stockholders' equity

Dollar amounts of individual items on financial statements can be misleading because they make no reference to the size of the company

Measurements of a firms ability to generate income

Study of the performance of ratios or other financial measures over time

Current assets divided by current liabilities

Measures of short-term debt paying ability

Measure to compare values of different stocks, calculated by dividing market price per share by amount of income per share

Another way at looking at inventory turnover by converting the inventory turnover ratio into a number of days

Calculated by dividing total stockholders' equity less preferred rights by the number of common shares outstanding

Responses:

Absolute amounts

Book value per share

Current ratio

Horizontal analysis

Liquidity ratios

Materiality

Average days to sell inventory

Price-earnings ratio

Profitability ratios

Return on equity

Solvency ratios

Trend analysis

Correct Answer:

Premises:

Responses:

An indication of the relative importance of an item of financial information

Analysis technique that compares amounts of the same item over two or more time periods

Measures of the long-term debt paying ability of the firm

Measure of profitability calculated by dividing net income by average total stockholders' equity

Dollar amounts of individual items on financial statements can be misleading because they make no reference to the size of the company

Measurements of a firms ability to generate income

Study of the performance of ratios or other financial measures over time

Current assets divided by current liabilities

Measures of short-term debt paying ability

Measure to compare values of different stocks, calculated by dividing market price per share by amount of income per share

Another way at looking at inventory turnover by converting the inventory turnover ratio into a number of days

Calculated by dividing total stockholders' equity less preferred rights by the number of common shares outstanding