All of the Following Statements Are True Regarding Ratios and Forecasts

question 44

Multiple Choice

All of the following statements are true regarding ratios and forecasts except:

• A) Ratios cannot confirm whether forecast assumptions will turn out to be correct.
• B) Ratios can tell whether future sales growth was accurately captured.
• C) Ratios cannot tell whether assumptions about future cash flows are realistic.
• D) Ratios can tell whether growth rates for sales are consistent with past sales growth performance.

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Definitions:

Future Cash Flows

Projected financial gains or losses for a specific period in the future.

Financial Advisors

Professionals who help individuals manage their finances by providing advice on money issues such as investments, insurance, mortgages, college savings, estate planning, taxes, and retirement.

Collateral

Assets that a borrower offers to a lender as security for a loan, which can be seized if the loan is not repaid according to the agreed upon terms.

Cash Flows

The full extent of money transactions processed by a business, considerably affecting its ability to liquidate assets.