121.Indicate whether each of the following statements about financial statement analysis is true or false._____ a) In horizontal percentage analysis, an item from the financial statements is expressed...

121.Indicate whether each of the following statements about financial statement analysis is true or false.


_____ a) In horizontal percentage analysis, an item from the financial statements is expressed as a percentage of the same item from a previous year's financial statements.
_____ b) The reason behind a financial statement ratio or percentage analysis result is usually self evident and does not require further study or analysis.
_____ c) Horizontal analysis for several years can be done by choosing one year as a base year and calculating increases or decreases in relation to that year.
_____ d) Vertical analysis compares two or more financial statement items within the same time period.
_____ e) One form of horizontal analysis is the preparation of common size financial statements.

122.Indicate whether each of the following statements about financial statement analysis is true or false.


_____ a) A common size income statement is prepared by converting each component to a percentage of net income.
_____ b) Common size financial statements are a form of vertical analysis, but the common size statements for two or more years may usefully be compared.
_____ c) Vertical analysis of a balance sheet involves converting each component to a percentage of stockholders' equity.
_____ d) Small percentage changes resulting from vertical analysis may still represent large dollar amounts; therefore, changes in both absolute dollar amounts and percentages should be examined.
_____ e) Vertical analysis of a company's balance sheet is useful in assessing its liquidity.