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(T / F) Liquidity ratios show a company's capacity to pay maturing current liabilities. (T/F) A solvency ratio measures the income or operating success of a company for a given period of time. Question text (T / F) Horizontal analysis is the calculation of dollar changes or percentage changes in comparative statement items or totals. Use of this analysis helps detect changes in a company's performance and highlights trends. Question text (T / F) Vertical analysis consists of a study of a single financial statement in which each item is expressed as a percentage of a significant total. Question text (T/F) In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities. Question text (T/F) From a creditor's point of view, the higher the debt to assets ratio, the lower the risk that the company may be unable to pay its obligations (T / F) Assume that Company A does not have any prepaid expenses on its balance sheet. If the Current Ratio is 1 and the Quick Ratio is 0.8, inventory equals 20% of current liabilities. Question text (T/F) Accounts receivable turnover is useful in assessing the profitability of receivables. Question text (T/F) If a company has sales of $130 in 2017 and $182 in 2016, the percentage decrease in sales from 2016 to 2017 is 40% Question text (T/F) Declining profitability and liquidity ratios are indications that a company may not survive.
Liquidity ratios show a company's... View the full answer