1) Web sites are not very useful when performing analysis.
2) The statement of cash flows should be reviewed for several time periods in order to
determine the major sources of cash and the major uses of cash.
3) The operating cash flow/current maturities of long-term debt and current notes
payable is a ratio that indicates long-term, debt-paying ability.
4) Operating leverage refers to the existence of fixed operating costs.
5) The SEC requires interim financial data on Form 10-Q.
6) The financial statements of the parent and the subsidiary are consolidated for all
subsidiaries unless control is temporary or does not rest with the majority.
7) All banks belong to a bank holding company.
8) 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.
9) A stock split merely increases the number of shares of stock; it usually does not
change retained earnings or paid-in capital.
10) The information on a firm’s lifo reserve can be used to improve the analysis of
inventory, liquidity in general, and the debt position.
11) The passenger load factor measures the percent that a carrier is filled, based on
capacity.
12) Financial Accounting Concepts establish generally accepted accounting principles.
13) Since the number of shares changes under both a stock dividend and a stock split,
any ratio based on the number of shares must be restated.
14) The principal financial statements of a corporation are the balance sheet, income
statement, and statement of cash flows.