Ratios Are Used as Tools in Financial Analysis

question 192

Multiple Choice

Ratios are used as tools in financial analysis

• A) instead of horizontal and vertical analyses.
• B) because they can provide information that may not be apparent from inspection of the individual components of the financial statements.
• C) because even single ratios by themselves are quite meaningful.
• D) because they are prescribed by GAAP.

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Definitions:

Severity

The extent to which something is serious or intense, often used in the context of disease or conditions to indicate the level of harm or discomfort.

Likelihood Risk

The probability that a particular threat will exploit a vulnerability to cause harm to an organization or system.

Paper Cut

A small, often painful, cut on the skin caused by the edge of a piece of paper.

Indirect Costs

Expenses that are not directly attributable to a specific project or activity, such as overhead costs.