You are the accountant for DigitMart, Inc., a publicly-traded digital marketing firm. After calculating the financial...
You are the accountant for DigitMart, Inc., a publicly-traded digital marketing firm. After calculating the financial ratios for DigitMart, you would compare DigitMart’s ratios to all of the following except:
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trends |
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competitor’s ratios |
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industry averages |
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benchmarks |
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state-wide averages |
Homework Answers
The correct answer is state-wide averages
Financial ratios of any company is compared to past trends, competitor's ratios, industry averages and benchmarks but it is never compared with state-wide averages. Reason being a company is compared with the industry it belongs and with competititors but it cannot be compared to the entire state comprising different types of industries. Such a comparison would yield incorrect conclusions.
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