Ratios Are Used as Tools in Financial Analysis

question 191

Multiple Choice

Ratios are used as tools in financial analysis

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

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Definitions:

Home Foreclosures

The legal process by which a lender takes possession of a property due to the borrower's failure to keep up with mortgage payments.

2008 Recession

A severe global economic downturn that began in 2008, marked by significant declines in consumer wealth, extensive business failures, and a sharp increase in unemployment.

Foreclosure Rates

The percentage of properties undergoing the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property.

Complexity

The quality or state of being intricate or complicated, often referring to systems with multiple interrelated components.