FIn Chap 3 Smartbook

The ____________ can help to explain why two firms with the same return on equity may not be operating in the same way.

DuPont identity

Which of the following are sources of cash? An increase in notes payable A decrease in accounts receivable A decrease in notes payable Purchasing an asset

Increase in notes payable, decrease in accounts receivable

What is one way in which financial managers use a common-size balance sheet?

To track changes in a firm's capital structure

Because we are almost always unable to obtain all of the market information we want, we rely on _________ numbers for much of our financial information.

accounting

When combining common-size and common-base year analysis, the effect of overall growth in assets can be eliminated by first forming the:

common-size statements

What does not affect ROE according to the DuPont identity?

investor sentiment

By combining common-size and base year analysis, we eliminate the effect of the _____.

overall growth