Although Ratios Can Provide Valuable Information, They Can Also Be

question 50

Multiple Choice

Although ratios can provide valuable information, they can also be misleading for the following reason(s) :

• A)ratios are only as reliable as the accounting data on which they are based.
• B)compilation of industry norms often do not report information about the distribution of values.
• C)comparative analysis depends on the availability of data for appropriately defined industries.
• D)all of these are correct.

---

Definitions:

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute one good for another.

Income

The money received by an individual or entity, typically measured over a certain period, for labor, services, or through investments.

Claret

A term primarily used in British English to refer to red Bordeaux wine.

Substitution Effect

The substitution effect occurs when consumers replace more expensive items with less costly alternatives, holding utility constant.