If the Assets Shown on a Balance Sheet Are Subjected

question 101

Multiple Choice

If the assets shown on a balance sheet are subjected to vertical analysis (using total assets as the base) ,an increase in the figure for non-current assets from 40% to 55% would always mean that:

• A) total non-current assets have increased as a percentage of total assets
• B) the dollar amount of current assets has decreased
• C) total current assets have decreased as a percentage of total assets
• D) total non-current assets have increased as a percentage of total assets and total current assets have decreased as a percentage of total assets

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Definitions:

Arbitrage Clientele

A group of investors who seek to profit from price differentials of the same asset in different markets, without risk.

Homemade Dividends

The concept that investors can create their own dividend policy by selling a portion of their portfolio of equities, instead of relying on the company's dividend payments.

Dividend Payout

The part of a company's profits that is paid out to shareholders as dividends.

Corporate Dividend

The distribution of a portion of a company's earnings, decided by the board of directors, to its shareholders.