A Ratio Calculated in the Analysis of Financial Statements

question 56

Multiple Choice

A ratio calculated in the analysis of financial statements

• A) expresses a mathematical relationship between two numbers.
• B) shows the percentage increase from one year to another.
• C) restates all items on a financial statement in terms of dollars of the same purchasing power.
• D) is meaningful only if the numerator is greater than the denominator.

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Definitions:

Trillion

Trillion is a numerical value represented as 1,000,000,000,000 (10^12), commonly used to quantify large figures such as government budgets, economics, and astronomy.

Induced Consumption

Spending by consumers that varies with income, meaning as income increases, consumption also increases, and vice versa.

Disposable Income

The budgeting capacity for households in terms of saving and spending after income tax commitments.

Saving

The portion of income that is not spent on consumption but rather set aside for future use, often in investments or deposit accounts.