Quiz Ch 12 – T/F Horizontal Analysis: Comparing Financial Statement Line Items
Financial Accounting
Thomas, Tietz, and Harrison
12th Edition
In horizontal analysis, a financial statement line item is compared between the current and prior year.
In horizontal analysis, a financial statement line item is compared between the current and prior year.
Net earnings, particularly earnings per share, receive the most focus among all items in a financial statement for corporations.
To conduct a comprehensive analysis of a company, it is essential to first comprehend its industry and operations.
When a company’s operating earnings show a consistent increase in proportion to its net sales, it indicates a rising level of earnings quality.
It is not advisable to isolate or exclude items such as discontinued operations, which represent one-time or non-recurring events, from operating earnings.
A decrease in income from operations signifies a deceleration in business operations.
The quick ratio indicates the proportion of a company’s total assets that are funded by debt.
Trend percentages, a type of horizontal analysis, are solely calculated for balance sheet items.
The quick ratio’s numerator comprises cash, short-term investments, and net current receivables.
Stockholders are more likely to receive dividends if the net income is higher.