Solved

Match Each of the Following Terms with the Appropriate Definitions

Question 187

Matching

Match each of the following terms with the appropriate definitions.

Premises:

Responses:

Solvency

A statement with data for two or more successive accounting periods placed in side-by-side columns, often with changes shown in dollar amounts and percents.

Comparative financial statement

Examination of financial data across time.

Equity ratio

The availability of resources to meet short-term obligations and to efficiently generate revenues.

Common-size financial statement

The comparison of a company's financial condition and performance to a base amount.

Vertical analysis

The application of analytical tools to general-purpose financial statements and related data for making business decisions.

Market prospects

A company's ability to generate positive market expectations.

Horizontal analysis

A company's ability to cover long-term obligations.

Liquidity and efficiency

The portion of total assets provided by equity, computed as total equity divided by total assets.

Profitability

A company's ability to provide financial rewards sufficient to attract and retain capital.

Financial statement analysis

A statement where each amount is expressed as a percent of a base amount to reveal the relative importance of each financial statement item.

Premises:

Solvency

Comparative financial statement

Equity ratio

Common-size financial statement

Vertical analysis

Market prospects

Horizontal analysis

Liquidity and efficiency

Profitability

Financial statement analysis

Responses:

A statement with data for two or more successive accounting periods placed in side-by-side columns, often with changes shown in dollar amounts and percents.

Examination of financial data across time.

The availability of resources to meet short-term obligations and to efficiently generate revenues.

The comparison of a company's financial condition and performance to a base amount.

The application of analytical tools to general-purpose financial statements and related data for making business decisions.

A company's ability to generate positive market expectations.

A company's ability to cover long-term obligations.

The portion of total assets provided by equity, computed as total equity divided by total assets.

A company's ability to provide financial rewards sufficient to attract and retain capital.

A statement where each amount is expressed as a percent of a base amount to reveal the relative importance of each financial statement item.

Correct Answer:

Premises:

Responses:

Solvency

Comparative financial statement

Equity ratio

Common-size financial statement

Vertical analysis

Market prospects

Horizontal analysis

Liquidity and efficiency

Profitability

Financial statement analysis