CMA 1.1 - 1.2 (16.12.2024)

What is the purpose of common-size financial statements?

• To compare firms of different sizes
• To measure profitability
• To assess liquidity
• To evaluate leverage

In common-size income statements, what is the base amount?

• Total assets
• Net sales
• Gross profit
• Operating income

In common-size balance sheets, what is the base amount?

• Total assets
• Net sales
• Gross profit
• Operating income

What is vertical analysis?

• Comparing line items over several periods
• Comparing line items within the same period
• Comparing firms of different sizes
• Comparing industry averages

What is horizontal analysis?

• Comparing line items over several periods
• Comparing line items within the same period
• Comparing firms of different sizes
• Comparing industry averages

What is the purpose of trend analysis?

• To compare firms of different sizes
• To measure profitability
• To identify patterns in data over time
• To evaluate leverage

What does a common-size income statement express each line item as a percentage of?

• Total assets
• Net sales
• Gross profit
• Operating income

What does a common-size balance sheet express each line item as a percentage of?

• Total assets
• Net sales
• Gross profit
• Operating income

What does the current ratio measure?

• Solvency
• Liquidity
• Leverage
• Profitability

What is the formula for the current ratio?

• Current assets / Total assets
• Current liabilities / Total liabilities
• Current assets / Current liabilities
• Current liabilities / Current assets