A. In a vertical analysis of a balance sheet, each item is expressed as a percentage of:

1. total assets or total liabilities.
2. total liabilities or total stockholders equity.
3. total assets or total stockholders equity.
4. total assets or total liabilities and stockholders equity.

B. In horizontal analysis of the balance sheet, how is the percentage of change determined?

1. Current year minus base year divided by base year.
2. Base year amount divided by current year amount.
3. Current year divided by total assets.
4. Base year and current year amounts are added and total is divide by 2

C. If a comparative balance sheet shows the amount and percentage of decrease in merchandise inventory from one year to the next, the firm used:

1. horizontal analysis.
2. vertical analysis.
3. common-size analysis.
4. trend analysis.

D. What does book value per share measure?

1. Current selling price of stock
2. Net assets
3. Amount shareholder would receive if assets sold for book value and the company was liquidated
4. Total equity

E. How does cumulative preferred stock work for the investor?

1. Cumulative means the investor is more likely to receive the stated dividend rate before any dividend is paid to common shareholders.
2. Preferred shareholders may elect to defer receiving dividend and allow it to accumulate.
3. Corporation does not have to pay this dividend.
4. Dividend rate multiplies every year.

F. The price-earnings ratio for common stock is computed using:

1. book value.
2. stated value.
3. market value.
4. par value.