Which of These Is Not a Limitation of Ratio Analysis

question 57

Multiple Choice

Which of these is not a limitation of ratio analysis?

• A) Firms of different size cannot be compared.
• B) One ratio is not enough information to make an overall judgement.
• C) Different accounting methods used by competitors.
• D) All are limitations.

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Definitions:

Exemption

A provision that removes a legal obligation or liability, often seen in tax laws, allowing certain incomes or transactions to be free from tax.

Single-family Homes

These are stand-alone houses designed to be occupied by a single family, offering privacy and space.

Eminent Domain

The power of a government to take private property for public use, with compensation to the owner.

Private Property

Ownership of property (land, buildings, or personal items) by individuals or corporations, recognized and protected by law.