2. What is an annual report? Briefly describe the key parts of the annual report. (Learning Objective 1) 3. What is horizontal analysis, and how is a percentage change computed? (Learning Objective 2) 4. What is trend analysis, and how does it differ from horizontal analysis? (Learning Objective 2) 5. What is vertical analysis? What item is used as the base for the income statement? What item is used as the base for the balance sheet? (Learning Objective 3) 6. Describe a common-size statement and how it might be helpful in evaluating a company. (Learning Objective 3) 7. What is benchmarking, and what are the two main types of benchmarks in financial statement analysis? (Learning Objective 3) 8. Briefly describe the ratios that can be used to evaluate a company's ability to pay cur- rent liabilities. (Learning Objective 4) 9. Briefly describe the ratios that can be used to evaluate a company's ability to sell mer- chandise inventory and collect receivables. (Learning Objective 4) 10. Briefly describe the ratio