Chapter 15 fill in the blank part a+b

In a(n) ______________-_________ statement, all items are expressed as percentages.

common-size

______________-________ statements are prepared in order to compare percentages of the current period with past periods, to compare individual businesses, or to compare one business with industry percentages published by trade associations or financial information services.

common-size

The ratio of current assets to current liabilities is called the _____________ ratio.

current

The use of ratios showing the ability of an enterprise to pay its current liabilities is known as _____________ _____________ _____________.

current position analysis

The percentage analysis of increases and decreases in corresponding items in comparative financial statements is called ___________________ _______________.

horizontal analysis

If significant amounts of nonoperating income and expense are reported on the income statement, it may be desirable to compute the ratio of _______________ _________ _________________ to total assets as a profitability measure.

income from operations

All publicly held corporations are required to have a(n) ________________ __________ of their financial statements.

independent audit

The _____________________ ____________ report describes the results of an independent examination of the financial statements.

independent auditors'

The number of times ______________ ____________ ___________ is a measure of the risk that interest payments will not be made if earnings decrease.

interest charges earned

The Sarbanes-Oxley Act requires independent auditors to attest to management's assessment of ______________ ____________.

internal control

_________________ _______________ is computed by dividing the cost of goods sold by the average inventory.

inventory turnover

The difference between the rate earned by a business on the equity of its stockholders and the rate earned on total assets is called _____________.

leverage

The ratio of __________________ _______ _______________________ ___________ is a solvency measure that indicates the margin of safety for creditors.

liabilities to stockholders' equity

_________________ is the ability of a business to convert its assets into cash.

liquidity

The ______________________ ___________________ _______ ________________ section of a corporate annual report includes management's analysis of the results of operations, financial condition, and significant risks.

management discussion and analysis (MDA)

In a vertical analysis of the income statement, each item is stated as a percent of _______ _________.

net sales

The ratio of _______ __________ ______ ___________ is a profitability measure that shows how effectively a firm utilizes its assets.

net sales to assets

The ___________ _____ ________ ________ _____ ______________ is computed by dividing the average inventory by the average daily cost of goods sold.

number of days' sales in inventory

Two measures that are useful for evaluating the management of inventory are the inventory turnover and the ____________ ______ _________ _________ ______ _______________.

number of days' sales in inventory

The ___________ _____ ________ ________ _____ ______________ is computed by dividing the average net accounts receivable by the average daily net sale

number of days' sales in receivables

The number of times ________________ _________________ _______ _____________ is a measure of the risk that dividends to preferred stockholders may not be paid.

preferred dividends are earned

The __________-____________ ratio is computed by dividing the market price per share of common stock at a specific date by the annual earnings per share.

price-earnings

___________________ _____________ focuses primarily on the relationship between operating results as reported in the income statement and resources available to the business as reported in the balance sheet.

profitability analysis

The ratio of the sum of cash, receivables, and marketable securities to current liabilities is called the __________ ratio.

quick

___________ ___________ are cash and other current assets that can be quickly converted to cash.

quick assets

The ________ ___________ _____ __________________ __________ is computed by dividing net income by average total stockholders' equity.

rate earned on stockholders' equity

The ________ ___________ _____ __________________ __________ measures the profitability of total assets, without considering how the assets are financed.

rate earned on total assets

Quick assets normally include cash, marketable securities, and _________________.

receivables

________________ ______________ focuses on the ability of a business to pay or otherwise satisfy its current and noncurrent liabilities.

solvency analysis

The rate earned on ____________________ __________ focuses only on the rate of profits earned on the amount invested by common stockholders.

stockholders' equity

Percentage analysis used to show the relationship of the component parts to the total in a single statement is called _____________ ____________.

vertical analysis

The excess of the current assets of a business over its current liabilities is called ______________ _____________.

working capital

______________ ___________________ ______________ is computed by dividing net sales by the average net accounts receivable.

accounts receivable turnover

The current ratio is sometimes called the working capital ratio or the _____________ ratio.

bankers'

All items in _______________-__________ statements are expressed only in relative terms.

common-size

The _______________ _________ is a profitability measure that shows the rate of return to common stockholders in terms of cash dividend distributions.

dividend yield

Earnings per share and _______________ per share on common stock are commonly used by investors in assessing alternative stock investments.

dividends

A profitability measure often quoted in the financial press and normally reported in the income statement in corporate annual reports is ______________ _______ __________.

earnings per share

____________ ______ __________ _____ ____________ _________ is the ratio of net income available to common shareholders to the number of common shares outstanding.

earnings per share on common stock

The ratio of ____________ ____________ _____ _________-________ __________________ is a solvency measure that indicates the margin of safety of the noteholders or bondholders.

fixed assets to long-term liabilities