Quiz Ch 12 – Base on Vertical Analysis of Balance Sheet
Financial Accounting
Thomas, Tietz, and Harrison
12th Edition
What is the typical base item used when conducting a vertical analysis of a balance sheet?
What is the typical base item used when conducting a vertical analysis of a balance sheet?
What is the ratio that measures the coverage of interest expense by operating income?
The debt ratio of a company is calculated as the difference between total assets and total liabilities divided by total assets.
In a vertical analysis of the income statement, line items are expressed as a percentage of net income.
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.