In Order to Understand If the Results of Ratio Calculations

question 96

Multiple Choice

In order to understand if the results of ratio calculations indicate a financially strong company,the results:

• A)Should be compared to other firms in the same industry.
• B)Are compared to same size firms in the same geographic region of the country.
• C)Are compared to the norms established by generally accepted accounting principles.
• D)Are compared to the largest firms in the country.

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Definitions:

Fair Value Measurement

Fair value measurement is the process of estimating the price at which an asset or liability could be exchanged in an orderly transaction between market participants at the measurement date.

Valuation Techniques

Methods applied to estimate the fair value of assets and liabilities, which can include market, income, and cost approaches.

Service Capacity

The total amount of service activity or output that a company can provide in a given period based on its current resources.