Hartney Company Has Just Hired a New President to Help

question 71

Multiple Choice

Hartney Company has just hired a new president to help the company recover after two years of declining sales and profits.The president has announced that they will be writing down $100 million in assets and increasing the allowance for doubtful accounts for the year, to clear out some old amounts.When preparing a ratio analysis of this company, the user should be aware of which of the following limitations of financial ratios?

• A)Financial statements are historical.
• B)Managers prepare financial statements.
• C)Accounting policies and estimates affect ratios.
• D)Financial statements are not the only source of information.

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Definitions:

Extrinsic Motivators

External factors that encourage people to perform particular actions, including rewards or punishments.

Measurable

Describes something that can be quantified or assessed using specific criteria or units of measure.

Feasibility Report

An analysis and evaluation of a proposed project to determine if it is technically, financially, and legally viable.

Venture Capitalists

Investors who provide capital to startup companies and small businesses with long-term growth potential in exchange for equity.