Absolute figures usually have more meaning than ratio comparisons.

True

False

Question 2

In order to determine the meaning of a ratio, some kind of comparison, such as an industry average or trend analysis, is helpful.

Group of answer choices

True

False

Question 3

A service firm will usually have a low amount of inventory, consisting primarily of supplies.

True

False

Question 4

The descriptive information in annual reports is not useful in statement analysis; only the financial statements themselves are of value.

True

False

Question 5

Profitability is the ability of the firm to generate earnings.

True

False

Question 6

In profitability analysis, absolute numbers are more meaningful than relative numbers because the analyst needs to know if one firm earned more dollars than the other.

True

False

Question 7

In practice, the income statement is frequently considered to be the least important financial statement.

True

False

Question 8

Ideally, income from continuing operations would be the better income figure to use to project the future from the analysis of historical statements.

True

False

Question 9

In analysis of income, for purposes of determining a trend, extraordinary items should be included.

True

False

Question 10

Earnings per share is the earnings per share of outstanding common stock.

True

False