Of the Following Statements About Financial Ratios, Which Is NOT

question 29

Multiple Choice

Of the following statements about financial ratios, which is NOT true?

• A) Financial ratios are designed to assess different aspects of the firm's financial situation.
• B) Financial ratios enable meaningful comparisons among companies of different sizes to assess which companies are performing better and which are performing worse.
• C) The Debt Ratio = Total Liabilities/Current Assets
• D) A rule of thumb is that companies should have a current ratio between 1 and 2.
• E) The current ratio is often important in debt covenants.

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