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Indicate whether each of the following statements about financial statement analysis is true or false.
_____ a) The ratio, plant assets to long-term liabilities, is a measure of a company's ability to obtain additional long-term financing.
_____ b) Generally, a company's current assets should be purchased using long-term financing such as bonds payable.
_____ c) Ratios that measure a company's profitability provide some measure of the effectiveness of the company's management.
_____ d) Net margin indicates the amount remaining from each sales dollar after cost of goods sold has been subtracted out.
_____ e) Net margin is also sometimes called the return on sales ratio.
Accelerating Expenses
Expenses that increase at a faster rate than usual, often leading to financial pressure on a business or project.
Economies of Scale
Businesses achieve cost benefits as a result of their operational size, where the cost for each produced unit diminishes as the size of operation expands.
Functional Lines
Divisions within an organization that are categorized based on specific functions or roles, such as marketing, finance, or operations.
Employee Performance
An assessment of how effectively an employee performs their job duties and responsibilities.
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