question 1: Trend analysis income stmnt display each component as a percentage of a base year, while common size income statements display each item as a percentage of:

A)net income

B)gross profit

C)net sales

D)total equity

2. According to many expert analysts, the two main strategies for achieving long-term success in any business entity are:

A)competitive advantage or strong return on assets

B)earnings leverage or strong return on assets

C)product/service differentiation or low cost leadership

D)competitive advantage or product/service differentiation

3 Which of the following best describes what the (ROCE) ratio measures?

A)The proportion of earnings before interest [EBI] that belongs to common shareholders

B)The degree to which the company uses common shareholders' capital to finance assets

C)How a company performs in using common shareholders' capital to generate earnings

D)The profitability of operations, without considering how the company's assets are financed

4 Which of the following would decrease a company's intensity of asset utilization or asset turnover?

A)A decrease in EBI (earnings before interest)

B)An increase in EBI (earnings before interest)

C)An increase in sales

D)An increase in average total assets

5 When a firm's return on equity far exceeds its return on assets, the firm is making good use of:

A) Long-term solvency B) Default risk minimization C) Cash flow coverage D)Financial leverage