A Limitation of Ratio Analysis Is That

question 11

Multiple Choice

A limitation of ratio analysis is that:

• A) it is useful only for large, multidivisional firms.
• B) inflation, which distorts the firm's balance sheet, is considered when calculating ratios.
• C) seasonal factors that distort the firm's balance sheet are taken into account when calculating ratios.
• D) window-dressing techniques will change the ratios of a firm.
• E) statistical procedures are considered to analyze the net effects of a set of ratios.

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