10. (TCO 2) Which of the following does not represent a problem with financial analysis? (Points : 5)
Financial statement analysis is an art; it requires judgment decisions on the part of the analyst.
Financial analysis can be used to detect apparent liquidity problems.
There are as many ratios for financial analysis as there are pairs of figures.
Some industry ratio formulas vary from source to source.
Adequate detailed disclosure of how the industry ratios are computed is often lacking.
11. (TCO 3) The debt ratio helps determine (Points : 5)
how well creditors are protected in cases of insolvency.
how to protect creditors.
total liabilities, in terms of debt.
how assets are used by creditors.
12. (TCOs 2 and 3) The debt ratio indicates (Points : 5)
the ability of a firm to pay its current obligations.
the efficient use of total assets.
the magnification of earnings caused by leverage.
a comparison of liabilities with total assets.