Indicate Whether Each of the Following Statements About Financial Statement

question 22

Short Answer

Indicate whether each of the following statements about financial statement analysis is true or false.
_____ a)The value of a corporation's price-earnings ratio indicates how optimistic investors are about a company's growth potential.
_____ b)The dividend yield ratio indicates the percentage of a company's net income that it paid out in dividends.
_____ c)Comparing financial statement ratios of companies in different industries may provide misleading results.
_____ d)Changes in general economic conditions (such as rate of inflation)can cause the values for a company's financial statement ratios to change from one year to the next.
_____ e)Conservatism produces a positive bias in a company's financial statements and thus in the ratios calculated from the financial statements.

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Definitions:

Machine Hour

A measurement of production time, counting one hour of operation of a machine or a piece of equipment for manufacturing purposes.

Sales Margin

The difference between the selling price of a product and the cost of goods sold, expressed as a percentage of sales, indicating the profitability of a product.

Fixed Costs

Expenses that do not change with the level of output or sales, such as rent, salaries, and insurance premiums.

Product Mix

This term represents the complete range of items that a business has available for sale, highlighting diversity in product offerings.