1 The percentage of sales method assumes that all corresponding financial statement variables will increase by the percentage amount.

True or False

2 What is the main reason for using accounting information in financial statement analysis?

Multiple Choice

• Accounting information matches the timing of cash inflows and outflows.

• Accounting numbers accurately reflect a company' s financial position.

• Accounting information is relevant and can be easily compared.

• Market value information is difficult to obtain on a consistent basis.

• Market value information is inaccurately measured.

3 Given the following information, calculate the ROE. Sales = $350,000; Net Income = $50,000; Total assets = $500,000; D/E = 1.5