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chapter15b - Chapter 15b 1 A long-term creditor looks to...

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Chapter 15b 1. A long-term creditor looks to profitability and solvency measures that indicate the company's ability to survive over a long period of time. A. True B. Fals e 2. Vertical analysis is a technique for evaluating a series of financial statement data over a period of time. A. True B. Fals e 3. The purpose of horizontal analysis is to determine the increase or decrease that has taken place, expressed as an amount or a percentage. A. True B. Fals e 4. Vertical analysis is also called trend analysis. A. True B. Fals e 5. Solvency ratios measure the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash. A. True B. Fals e 6. The acid-test ratio is a measure of a company's immediate short-term liquidity.
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A. True B. Fals e 7. Inventory turnover and profit margin are profitability ratios. A. True B. Fals e 8. Asset turnover measures how efficiently a company uses its assets to generate sales.
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