True or False:

1) Liquidity refers to the companys ability to pay its short-term liabilities as they fall due.

2) Short-term creditors are more interested in the ratios indicating the profitability of the firm.

3) In horizontal analysis, the percentage changes cannot be calculated if the base year amount is zero, since division by zero is not defined.

4) In preparing common-size statements, income statement items are expressed as a percentage of total assets.

5) Under horizontal analysis, the difference between figures of the two periods is calculated, and the percentage change is computed. The percentage change may be computed by dividing the difference between the most recent value and base period by the most recent value.

6) Horizontal analysis involves comparing figures reported in the financial statements of two or more consecutive accounting periods.

7) The base period for calculating percentage changes when conducting horizontal analysis is usually the most recent period.

8) Long-term creditors are more interested in the firms liquidity than the firms solvency.

9) In conducting ratio analysis, the numbers to be compared and expressed as a ratio should be meaningfully related to each other so that the resulting ratio can serve the purpose for which it is computed.

10) Vertical analysis involves comparing figures in the financial statements of a single-period.