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1)liquidity measures: .the comoany's ability to generate profits on inventory sold. .the company's ability to return...

1)liquidity measures:
.the comoany's ability to generate profits on inventory sold.
.the company's ability to return cash to stockholders.
. the company's ability to pay current obligations using current assets.
.the company's ability to efficiently collect cash from customers.

2)Vertical anslysis refers to:
. exoressing each items in a financial statement as its trend over time.
. expressing each items in a financial statement in order of highest amount to lowest amount.
. expressing each item in a financial statement as a percentage of the same amount.
. expressing each item in a financial statement in order of highest importance to lowest importance.


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Answer #1

Answer :

1. Option - C, the company's ability to pay current obligations using current assets.

Reason : Liquidity measures, measure a firm's ability to pay operating expenses and other short-term, or current, liabilities.

2. Option - A, expressing each items in a financial statement as its trend over time.

Reason :Vertical analysis is the proportional analysis of a financial statement, where each line item on a financial statement is listed as a percentage of another item. Vertical analysis is also useful for trend analysis, to see relative changes in accounts over time, such as on a comparative basis over a five-year period.

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