Financial statement analysis can be performed in a variety of ways. The following statements relate to two of these ways: horizontal and vertical analysis.
a. Horizontal analysis should not include more than two years of data.
b. Only the balance sheet should be subjected to horizontal analysis.
c. A special type of horizontal analysis called trend analysis is useful for identifying patterns over long periods.
d. Vertical analysis controls for differences in company size, whereas horizontal analysis does not.
e. Common-size financial statements are statements for companies of approximately the same size and in the same industry.
f. Liquidity is a measure of a company's ability to meet its immediate financial obligations.
Required
Indicate whether each of the preceding statements is true or false.