Answer Happy

Match the following: 1 6 Solvency Profitability ratios 2 Growth stocks 7 Vertical analysis Match each of the options above to the items below. Refers to a company's ability to pay its long-term liabilities. 3 Measure the earnings or operating effectiveness of a company. Refers to a company's ability to pay its current liabilities. Horizontal analysis Analyzes trends in financial statement data for a single company over time. 4 Liquidity 5 Value Stocks

Have lower share prices in relationship to their fundamental ratios and therefore trade at lower PE ratios. Have high expectations of future earnings and therefore usually trade at higher P/E ratios. Expresses each item in a financial statement as a percentage of the same base amount.