Business Finance Week 5

The income statement is a summary of how profits and losses were generated during an accounting period.

• True

• False

What is an example of an operating expense?

• Accounts Payable

• Notes Payable

• Accounts Receivables

• Salaries and Wages

You are analyzing your financial statements for 2021 and 2022. You are completing a horizontal analysis, which is also known as common size analysis. 

• True

• False

Common size analysis of an income statement requires two periods of information. 

• True

• False

A current ratio of 2:1 means there are $2 of current liabilities to $1 of current assets

• True

• False

The quick ratio analyzes the ability to pay current liabilities and includes inventory

• True

• False

A company that has a high debt to equity ratio is financed through

• Investors

• Celine Dion

• The bank/lenders

• Nicole Chuchmach