When You Are Interpreting Financial Ratios, It Is Useful to Compare

question 155

True/False

When you are interpreting financial ratios, it is useful to compare a company's ratios to the same ratios from a prior period or to the ratios of another company in the same industry.

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Definitions:

Alpha

A measure of the active return on an investment, gauging how much a portfolio or fund outperforms or underperforms its benchmark index.

Hedge Fund

An investment fund that employs various strategies to produce high returns, including leverage, short-selling, and derivatives, accessible typically to wealthy investors.

Incentive Bonus

A form of additional compensation paid to an employee as a reward for achieving certain goals or exceptional performance.

Gross Return

The total return on an investment before any deductions for fees or expenses.