71. Horizontal analysis is also known as:
A. Liquidity analysis.
B. Absolute analysis.
C. Trend analysis.
D. Revenue analysis.
72. The study of an individual item or account over several accounting periods, such as months, quarters or years is known as:
A. Percentage analysis
B. Ratio analysis
C. Vertical analysis
D. Horizontal analysis
73. Which type of approach should be used when evaluating corporate results using horizontal analysis?
A. Study of absolute amounts.
B. Percentages.
C. Trends.
D. All of these answer choices are correct.
74. In vertical analysis, each item is expressed as a percentage of:
A. Net income on the income statement.
B. Net sales on the income statement.
C. Total expenses on the income statement.
D. None of these answer choices are correct.
75. In vertical analysis, each item is expressed as a percentage of:
A. Total cash on the balance sheet.
B. Total assets on the balance sheet.
C. Total current assets on the balance sheet.
D. None of these answer choices are correct.
76. Short-term creditors are usually most interested in assessing:
A. Liquidity.
B. Solvency.
C. Managerial effectiveness
D. Profitability.
77. Which ratio would you use to examine a company's ability to pay its debts in the short- term?
A. Earnings per share
B. Debt to assets ratio
C. Return on equity
D. Acid-test ratio
78. Long-term creditors are usually most interested in evaluating:
A. Liquidity
B. Managerial effectiveness
C. Solvency
D. Profitability
79. Lakeland Corporation has working capital of $440,000, and Houston Corporation has working capital of $320,000. Which of the following statements is incorrect?
A. Since working capital is an absolute amount, other factors such as size of the company and materiality will help to determine liquidity of these two companies.
B. Since Lakeland’s working capital exceeds Houston’s working capital, it is safe to conclude that Lakeland is more liquid than Houston.
C. If Houston Corporation is smaller than Lakeland or has lower current liabilities; Houston could be more liquid than Lakeland.
D. None of these answer choices are correct.
80. Which of the following statement is correct regarding the quick ratio?
A. The numerator for the quick ratio is current assets.
B. The quick ratio is a less conservative variation of the current ratio.
C. The quick ratio is also called the working capital ratio.
D. The numerator for the quick ratio is current assets minus inventory minusprepaid expenses.