123.Indicate whether each of the following statements about financial statement analysis is true or false.Ratio analysis may involve studying relationships between an item reported on the balance...

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


Ratio analysis may involve studying relationships between an item reported on the balance sheet and another reported on the income statement.
Comparing sales in 2014 with sales for 2013 is a form of vertical analysis.
Comparing net income in 2014 with sales for 2014 is a form of horizontal analysis.
Liquidity ratios measure a company's ability to generate cash flows in the short term.
Working capital is calculated by using the following formula: current assets - current liabilities.

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


Working capital is a measure of the amount of current assets a company would have left after paying its current liabilities.
If a transaction causes a company's working capital to increase, the transaction caused the company to become less liquid.
Interpretation of a company's current ratio can be difficult because it is an absolute amount.
The quick ratio is a more conservative variation of the current ratio.
The quick ratio is usually calculated by using the following equation: cash + receivables + current marketable securities / current liabilities.