21. What is the another name for vertical analysis?
A. Horizontal analysis
B. Common size analysis
C. Trend analysis
D. Percentage analysis
22. If a user wanted to analyze the discretionary expenses, which of the following would be the most useful analytical tool?
A. Horizontal analysis
B. Vertical analysis
C. Gross margin
D. Return on sales
23. In performing a vertical analysis, what would property, plant, and equipment be expressed as a percentage of?
A. Total current assets
B. Total assets
C. Total liabilities
D. Sales revenue
24. In performing a vertical analysis, what would accounts payable be expressed as a percentage of?
A. Total current liabilities
B. Total assets
C. Sales revenue
D. Total shareholders' equity
25. A common size analysis of the balance sheet is most likely to signal investors that:
A. the company is collecting receivables faster.
B. the company has increased sales.
C. the company is using assets efficiently.
D. the company is becoming more leveraged.
26. What is another name for horizontal analysis?
A. Vertical analysis
B. Common size analysis
C. Trend analysis
D. Percentage analysis
27. In a horizontal or trend analysis, what is each item expressed as a percentage of?
A. Total assets
B. Total sales
C. The base year amount
D. Net earnings
28. A user has decided to perform a horizontal analysis of Nanton Company. The year 2012 is used as the base year. Sales in 2012 were $4,250,000. Sales in 2013 and 2014 were $5,788,000 and $6,125,000, respectively. The trend data amount for 2014 for sales would be closest to?
A. 106%
B. 113%
C. 136%
D. 144%
29. If you wanted to compare the increase in sales to the increase in assets, which of the following tools would you use?
A. Vertical analysis
B. Horizontal analysis
C. Return on asset
D. Asset turnover
30. Which analytical tool gives the best indication of the growth and decline of an entity?
A. Vertical analysis
B. Horizontal analysis
C. Return on asset
D. Profit margin