Consider the following summaries of the following financial statements related to the Plaza Merchandising Company for the two comparative years 2019 and 2020:

Summaries of financial statements 2020 2019 Current assets 70000 70000 Non-current assets 50000 30000 Current liabilities 37000 20000 Long-term liabilities 37000 40000 Share capital 40000 40000 Retained earnings 6000 Zero Net sales 115000 150000 Cost of goods sold 75000 90000 Selling expenses 36000 25000 Administrative expenses 13000 10000 Other income expenses Zero 3000 Net cash from operating activities 25000 8000 Cash inflows from financing activities 9000 11000 Cash inflows from investing activities Zero 21000 Cash outflows on financing activities 17000 30000 Cash outflows on investing activities 4000 4000 *Required: Apply the horizontal analysis tool to answer the following True/False questions:

Although the trend of assets managing policy was toward deterioration but still within the accepted zone.

Answer 1Choose...FalseTrue

The ability of the liquidity position to achieve its objectives deteriorated in year 2020 in relation to the year 2019.

Answer 2Choose...FalseTrue

The horizontal ratios indicate that the trend of the quantity of profitability was toward deterioration over the years.

Answer 3Choose...FalseTrue

The horizontal ratios indicate that the trend of the quality of profitability was toward improvement over the years.

Answer 4Choose...FalseTrue

In general, the overall trend of cash outflows performance was toward improvement.

Answer 5Choose...FalseTrue

The trend of cash inflows performance from financing activities improved, whereas the trend of cash outflows performance on financing activities deteriorated.

Answer 6Choose...FalseTrue

Suppose that a horizontal ratio of an item in current year increased up to 250% in relation to base year, then the horizontal ratio of the same item in the same current year will be changed positively by 150% since the same base year.

Answer 7Choose...FalseTrue

Cost of goods sold played a positive role in year 2020 because its horizontal ratio decreased down in relation to base year.

Answer 8Choose...FalseTrue

The trend of performance of both cash inflows and cash outflows from investing activities improved.

Answer 9Choose...FalseTrue

The trend of the external financing policy was toward less costly because percentage of increase in long-term financing sources was less than percentage of increase in short-term financing sources.

Answer 10Choose...FalseTrue

It is obvious that the trend of financing policy of the company was toward higher risk because percentage increase in total equity was less than percentage of increase in total liabilities.

Answer 11Choose...FalseTrue

In general, the overall trend of cash inflows performance was toward improvement.

Answer 12Choose...FalseTrue

The horizontal ratio, which will be used to evaluate the trend of growth rate in the year 2020, cannot be calculated but it is obvious that it was toward deterioration.

Answer 13Choose...FalseTrue

The quality of liquidity position deteriorated in 2020 in relation to 2019.

Answer 14Choose...FalseTrue

Both selling expenses and administrative expenses played negative roles in year 2020 because their horizontal ratios increased up in relation to base year.