Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition

EXERCISE 14-6

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

Instructions

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, ...