Indicate Whether Each of the Following Statements About Financial Statement

question 94

True/False

Indicate whether each of the following statements about financial statement analysis is true or false.________ a)Vertical analysis of a company's balance sheet is useful in assessing its liquidity.________ b)Common size financial statements are a form of vertical analysis, but the common size statements for two or more years may usefully be compared.________ c)Vertical analysis of a balance sheet involves converting each component to a percentage of stockholders' equity.________ d)Small percentage changes resulting from vertical analysis may still represent large dollar amounts; therefore, changes in both absolute dollar amounts and percentages should be examined.________ e)A common size income statement is prepared by converting each component to a percentage of net income.

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Definitions:

Annual Pension Contributions

The total amount of money contributed to a pension fund by the employer, employees, or both within a year, intended to support employees' retirement benefits.

Cumulative Earnings

The total amount of net income a company has earned over its lifetime, after dividends are paid out.

Hourly Wage Rate

The financial compensation given per hour of labor.

Time and a Half

A pay rate that is 1.5 times the employee's regular hourly rate, usually paid for overtime work beyond the standard workweek hours.