Financial Ratios I. Allow Comparisons Across Firms Without Concern Over Firm Size

question 87

Multiple Choice

Financial ratios
I. allow comparisons across firms without concern over firm size.
II. can compare a firm's operating and financial status to industry norms.
III. provide insights into a companies future.
IV. look at the liquidity, activity, leverage, profitability and market measures of a firm.

• A) II and IV only
• B) I and II only
• C) I, II and IV only
• D) I, II, III and IV

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Definitions:

Memory Biases

The tendency for memory to be distorted by previous experiences, desires, or the current emotional state.

Representativeness Heuristic

A belief that outcomes will always reflect characteristics of the process that generated them (e.g., an expectation that the outcome of a series of coin flips will always look random).

Coin Flips

A random process used to generate two equally likely outcomes, typically representing "heads" or "tails."

Framing

The way information is presented or structured, affecting perception and decision-making.