Chapter 17—Financial Statement Analysis

TRUE/FALSE

42. Comparing dividends per share to earnings per share indicates the extent
to which the corporation is retaining its earnings for use in operations.

ANS: T PTS: 1 DIF: Easy OBJ: 17-03

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-
23-Financial Statement Analysis

43. When you are interpreting financial ratios, it is useful to compare a

company's ratios to some form of standard.

ANS: T PTS: 1 DIF: Easy OBJ: 17-03

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-
23-Financial Statement Analysis

44. Ratios and various other analytical measures are not a substitute for sound
judgment, nor do they provide definitive guides for action.

ANS: T PTS: 1 DIF: Easy OBJ: 17-03

NAT: AACSB Analytic | AICPA BB-Critical Thinking | ACBSP-
APC-23-Financial Statement Analysis

45. Interpreting financial analysis should be considered in light of conditions

peculiar to the industry and the general economic conditions.

ANS: T PTS: 1 DIF: Easy OBJ: 17-03

NAT: AACSB Reflective Thinking | AICPA BB-Critical Thinking |
ACBSP-APC-23-Financial Statement Analysis

46. A company can use comparisons of its financial data to the data of other
companies and industry values to evaluate its position.

ANS: T PTS: 1 DIF: Easy OBJ: 17-03

NAT: AACSB Analytic | AICPA BB-Critical Thinking | ACBSP-
APC-23-Financial Statement Analysis