Question

Which of the following does NOT correctly complete this sentence: The financial statements of a company . A. Can be useful to the financial manager of the firm even though they employ accounting figures and not actual cash flows. B. Are useful for analysts outside the firm. C. Are generally considered a useful second best source of information for analysts of the firm if only because this information is often all that is readily available. D. Are rarely comparable from year to year since accountants are constantly changing accounting methods resulting in very little consistency from year to year.

35. Which of the following regarding financial statement analysis is NOT correct? A It is straightforward to calculate the market value based measures of firm performance using financial statements prepared according to GAAP. B. Asset management ratios measure the intensity and efficiency of asset use. C. For common size statements, we divide asset and liability accounts by total assets and statement of comprehensive income accounts by sales. D. An increase in a firm's net fixed assets is considered to be a use of cash.

Answer 1

D. Are rarely comparable from year to year since accountants are constantly changing accounting methods resulting in very little consistency from year to year.

Accounting methods are not frequently changed and any changes does provide retrospective effect making the financial comparable

35. A. It is straightforward to calculate the market value based measures of firm performance using financial statements prepared according to GAAP.

Market value based measures cannot be calculated from financial statements.