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A company’s balance sheet shows the value of assets, liabilities, and stockholders’ equity
atthe end of the fiscal year.
for any given period of time
at a specific point in time.
over an annual period.
-On a balance sheet, retained earnings are not “unspent cash” because
theyhave been paid out to common stockholders.
they have an arbitrarily assigned value.
they are always changing.
they have been used to finance the firm’s assets.
-For both managers and external financial analysts, blank______ is the single most important accounting number found on the income statement.
net income (net profit after tax)
earning before interest and taxes (EBIT)
earnings available for common stockholders
-Earnings per share (EPS) is calculated by
dividingpretax income by the number of shares of common stock outstanding.
dividing the dividends paid by the number of shares of common stock outstanding.
dividing earnings available for common stockholders by the number of shares of common stock outstanding.
dividing net profits after tax by the total number of preferred and common stock shares outstanding.
-Net working capital
is a measure of a firm’s overall liquidity.
is defined as total assets minus current liabilities.
reflects decreasing firm solvency as it increases
all of the above
-Why is the quick ratio a more appropriate measure of liquidity than the current ratio for a large-airplane manufacturer?
It recognizes the contribution of all assets so that analysts can see how “quickly” a firm can satisfy its short-term obligations.
It excludes inventory from the numerator of the ratio because it is difficult to convert inventory to cash and most sales are made on a credit basis.
It recognizes that parts can be quickly converted to cash.
It is not more appropriate. The current ratio would provide better information in this situation.
-The one fixed asset that is not depreciated is blank________.