Which of the Following Is NOT a Limitation of Financial

question 35

Multiple Choice

Which of the following is NOT a limitation of financial statement analysis?

• A) Financial statements report on the past.
• B) Ratio and trend analyses will help identify strengths and weaknesses of a company.
• C) A single ratio, by itself, is not likely to be very useful.
• D) Financial statement analysis is not likely to reveal why things are as they are.

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Definitions:

Capital

Wealth in the form of money or assets, invested in order to start a business or invest in order to generate more wealth.

Real GDP

Gross domestic product adjusted for changes in the price level, providing a more accurate picture of an economy's size and growth.

Consumption

the process by which goods and services are used up by individuals or groups, typically considered the end-use in economic production cycles.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit.