98.The current ratio is one of the most common measures of solvency.
True False
99.Working capital is current assets minus current liabilities.
True False
100.Jenkins Company's current ratio is higher than the average for its industry, while its quick ratio is below the industry average. One possible interpretation for these results is that Jenkins carries less inventory than most companies in its industry.
True False
101.The quick ratio although similar to the current ratio is more conservative.
True False
102.Solvency ratios are used to analyze the long-term debt-paying ability and the composition of the financing structure of the firm.
True False
103.The accounts receivable turnover ratio can be used to asses a firm's solvency.
True False
104.In terms of solvency, the larger the number of times interest is earned, the better.
True False
105.When debt is used to finance the purchase of assets, the term or time span of the debt should always be shorter than the lifespan of the assets.
True False
106.Profitability ratios attempt to assess the company's ability to generate earnings.
True False
107.The most frequently quoted measure of earnings performance is the stockholders' equity ratio.
True False
108.A limitation of financial statement analysis stems from the discretion of management to choose accounting procedures that cast the best light on the firm's performance.
True False