129.Indicate whether each of the following statements about financial statement analysis is true or false.The asset turnover ratio is calculated by dividing net income by average total assets.The...

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


The asset turnover ratio is calculated by dividing net income by average total assets.
The asset turnover ratio is likely to be high in an industry in which operations require only a minimal investment in assets.
Return on equity measures the wealth generated by the amount of assets invested in a business.
A higher value for the return on investment ratio would generally indicate more effective company management.
The use of financial leverage often causes a business's return on equity to be lower than its return on investment.

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


Both dividends and earnings performance are indicators of the value of a company's stock.
The most widely quoted measure of a company's earnings performance is return on equity.
Earnings per share is calculated for a company's common stock.
Investors need to understand that the value of a company's earnings per share is affected by its choices of accounting principles and assumptions.
The book value per share measures the market value of a corporation's stock.

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


The value of a corporation's price-earnings ratio indicates how optimistic investors are about a company's growth potential.
The dividend yield ratio indicates the percentage of a company's net income that it paid out in dividends.
Conservatism produces a positive bias in a company's financial statements and thus in the ratios calculated from the financial statements.
Changes in general economic conditions (such as rate of inflation) can cause the values for a company's financial statement ratios to change from one year to the next.
Comparing financial statement ratios of companies in different industries can give misleading results.