Although Ratios Can Provide Valuable Information, They Can Also Be

question 49

Multiple Choice

Although ratios can provide valuable information, they can also be misleading for which of the following reasons?

• A) Ratios are only as reliable as the accounting data on which they are based.
• B) Compilation of industry norms often does not report information about the distribution of values.
• C) Comparative analysis depends on the availability of data for appropriately defined industries.
• D) All of these are correct.

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Definitions:

Fixed Amounts

Predetermined quantities or sums that do not change over time or in response to varying conditions.

Trade by Bartering

A method of exchanging goods or services directly without using money.

Laissez-Faire

Laissez-faire is an economic philosophy advocating for minimal government intervention in the market, with transactions between private parties being free from tariffs, subsidies, and enforced monopolies.

Government Interference

Actions by the government that affect the market, often with the intention of correcting market failures or achieving a social objective.