Ratio Analysis

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Ratio Analysis

Ratio analysis is an important component of evaluating company performance. It can provide great insights into how a company matches up against itself over time and against other players within the industry.

However, like many tools and techniques, ratio analysis has a few limitations and weaknesses.

Which of the following statements represent a weakness or limitation of ratio analysis? Check all that apply.

Inflation can distort balance sheet data.

A firm’s ratios can lead to conflicting conclusions—some ratios might be “good” and some “bad.”

Ratio analysis is conducted using benchmarking techniques.

Financial-Management

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Answer 1

Answer #1

Inflation can distort balance sheet data.

A firm’s ratios can lead to conflicting conclusions—some ratios might be “good” and some “bad.”

answered by: Hauser

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Answer 2

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Ratio Analysis

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