When Are Ratios Most Useful for Analysis

question 139

Multiple Choice

When are ratios most useful for analysis?

• A) When used alone.
• B) When compared with historical ratios of the same company.
• C) When compared with ratios for other companies in the industry.
• D) When compared with both historical ratios of the same company and ratios for other companies in the industry.

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Definitions:

Capital Account

An account on a country's balance of payments that records transactions involving the acquisition or disposal of capital assets.

Old Partner

A former member of a partnership who has ceased to be part of the entity, often due to retirement or agreement termination.

Partnership Cash

Funds held and utilized within a partnership, which are contributed by and available to the partners according to the partnership agreement.

Liability

A financial obligation or debt that a company owes, which must be settled over time through the transfer of economic benefits including money, goods, or services.