True or false?

1.Horizontal analysis will result in common-size statements.

2. Financial statement analysis is used to show how items in a companys financial statements relate to the companys financial performance objectives.

3.Trend analysis requires the establishment of a base year for comparison purposes.

4. In a common-size balance sheet, total liabilities are represented by 100 percent.

5. It is in the best interests of a company to base executive compensation on multiple performance measures.

6. The price/earnings (P/E) ratio is an indication of investor confidence in a company.