Indicate Whether Each of the Following Statements About Financial Statement

question 105

Essay

Indicate whether each of the following statements about financial statement analysis is true or false.The ratio, plant assets to long-term liabilities, is a measure of a company's ability to obtain additional long-term financing.Generally, a company's current assets should be purchased using long-term financing such as bonds payable.Ratios that measure a company's profitability provide some measure of the effectiveness of the company's management.Net margin indicates the amount remaining from each sales dollar after cost of goods sold has been subtracted out.Net margin is also sometimes called the return on assets ratio.

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Definitions:

Net Income

The amount of profit left after all operating expenses, interest, taxes, and preferred stock dividends have been deducted from total revenues.

Additional Investment

Funds invested into a business by its owners or shareholders over and above the initial investment.

Income Statement

A financial statement that reports a company's revenues, expenses, and profits over a specific period, showing the financial performance of the business.

Statement Of Owner's Equity

A financial document showing changes in the equity of a company over a certain period due to various business activities, such as earnings and withdrawals.