Chapter 23 – Financial Statement Analysis
Chapter 23
Financial Statement Analysis
1. In horizontal analysis, the base year is the most recent year.
2. Since each firm is a unique entity, comparison of data for the firm with industry averages is
of no use in financial analysis.
3. When horizontal analysis is performed, no percentage change is computed for a given item
if there is no balance for that item in the base year.
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16. A company reported an expense of $30,000 for the current year that was $6,000 higher
than the previous year. The increase from last year to this year was ____________________
17. A firm had current liabilities of $60,000 on December 31, 2012, and $51,000 on
December 31, 2013. Current liabilities decreased by ____________________ percent.
18. A company reported net income of $80,000 for 2012, and net income of $100,000 for
2013. Net income increased by ____________________ percent.
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39. If current assets are $90,000 and total assets are $270,000, what percentage of total assets
are current assets?
40. If current liabilities are $90,000, long-term liabilities are $270,000, and total assets are
$600,000, what is the percentage of total liabilities to total assets?
41. Trend analysis looks at
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55. If total merchandise available for sale is 72 percent of net sales and cost of goods sold is
64 percent of net sales, gross profit on sales is
56. If the ratio of total stockholders’ equity to total assets was greater in 2013 than in 2012,
then
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63. Using the comparative income statement given below, prepare a vertical analysis of all
items. Carry all calculations to two decimal places and then round to one decimal place.
(Leave all vertical analysis percentages unadjusted in this problem.)