Profitability Analysis and Analytical Issues Paper 9

1

In financial statement analysis, expressing all financial statement items as a percentage of base-year amounts is called






2

On a common-size balance sheet, what would represent 100%?






3

A company has the following summarized income statement:
Sales $1000
Sales returns and allowances 10
Cost of goods sold 600
Gross profit 390
Operating expenses 190
Income before taxes 200
Income taxes 70
Net income 130
Which of the following amounts would be converted to 100% on a common-size income statement?






4

In assessing the financial prospects for a firm, financial analysts use various techniques. An example of vertical, common-size analysis is






5

Leases should be classified by the lessee as either operating leases or capital leases. Which of the following statements best characterizes operating leases?






6

Careful reading of an annual report will reveal that off-balance-sheet debt includes






7

Which one of the following is not a form of off-balance-sheet financing?






8

An investment in trading securities is measured on the statement of financial position at the






9

An investment in available-for-sale securities is measured on the statement of financial position at the






10

When using fair value accounting it would be to a firm’s benefit to report the liability at fair value when it has






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