Industry standards for financial statement analysis:

Multiple Choice

• Are based on a single competitor's financial performance.

• Are set by the government.

• Are used to compare a companys performance to industry performance.

• Are based on rules of thumb.

• Compare a company's income with its prior year's income.

External users of accounting information:

Multiple Choice

• Are those individuals involved in managing and operating the company.

• Include internal auditors and managers.

• Are not directly involved in operating the company.

• Make strategic decisions for a company.

• Make operating decisions for a company.

Refer to the following selected financial information from Phantom Corporation Compute the company's inventory turnover for Year 2.

	Year 2	Year 1
Merchandise inventory	271,000	253,000
Cost of goods sold	484,700	433,100

Multiple Choice

• 1.65.

• 1.79.

• 1.85.

• 0.89.

• 1.71.