Which of the following is a limitation of ratio analysis? a. Many ratios can be easily...
Which of the following is a limitation of ratio analysis?
| a. |
Many ratios can be easily calculated. |
|
| b. |
Ratios provide lenders, investors, and managers with important information. |
|
| c. |
Ratios are more meaningful when compared to some standard of performance. |
|
| d. |
There are too many different types of ratios. |
Homework Answers
Answer: Option C
Explanation: Ratio analysis is an important method of analyzing performance or lead indicators. They are considered a means to the solution but not the actual solution. They can be manipulated as a firm may be changing the year-end financials in order to improve the ratios. The ratios are more helpful when they give a comparison with another standard of performance.
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Which of the following is a limitation of ratio analysis?
a.
Many ratios can be easily...
Ratio Analysis
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