Ratios Are Used as Tools in Financial Analysis

question 192

Multiple Choice

Ratios are used as tools in financial analysis

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

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Definitions:

Stock Exchanges

Marketplaces where securities, such as stocks and bonds, are bought and sold by investors.

Issuing Companies

Companies or entities that offer securities, such as stocks or bonds, to the public for the purpose of raising capital.

Venture Capital Investors

Individuals or firms that provide funding to start-up companies or small businesses with long-term growth potential.

Equity Holders

Investors who own shares or stock in a company, giving them ownership interest and typically voting rights in the corporation.