Which Statement Is True of Ratio Analysis

question 26

Multiple Choice

Which statement is true of ratio analysis:

• A) can provide useful information on a firm's current position but should never be used to forecast future performance.
• B) can provide useful information on a firm's current position and hint at future performance.
• C) can provide useful information on a firm's past but not current position.
• D) can provide useful information on a firm's past and current position, but should never be used to forecast future performance.

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Definitions:

Referent Other

An individual or group that people compare themselves to for the purpose of evaluating their own behavior, abilities, or beliefs.

Perceived Inequity

The sense of feeling under-rewarded or over-rewarded in comparison with others.

Inputs Ratio

Measurement comparing the amount or quality of resources used to the output or results achieved, often used in productivity and efficiency analysis.

ERG Theory

A theory of human motivation that categorizes needs into three groups: Existence, Relatedness, and Growth, suggesting that individuals seek to fulfill these needs in a hierarchical order.