Purpose: (L.O. 1 thru 7) This exercise will quiz you about terminology used in this chapter.

A list of accounting terms with which you should be familiar appears below:

Acid-test (quick) ratio Price-earnings (P-E) ratio
Asset turnover Profit margin
Change in accounting principle Profitability ratios
Comprehensive income Pro forma income
Current ratio Quality of earnings
Debt to total assets ratio Ratio
Discontinued operations Ratio analysis
Earnings per share (EPS) Receivables turnover
Extraordinary items Return on assets
Horizontal analysis Return on common stockholders' equity
Inventory turnover Solvency ratios
Leveraging Times interest earned
Liquidity ratios Trading on the equity (leverage)
Payout ratio Vertical analysis


For each item below, enter in the blank the term that is described.

  1. __________________________________ A technique for evaluating financial statement data that expresses each item within a financial statement in terms of a percent of a base amount; often called common-size analysis.
  2. __________________________________ A technique for evaluating a series of financial statement data over a period of time to determine the increase (decrease) that has taken place, expressed as either an amount or a percentage; often called trend analysis.
  3. __________________________________ An expression of the mathematical relationship between one quantity and another. The relationship may be expressed either as a percentage, ...

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