Financial Ratios Are Only Useful When They Are Compared to Other

question 13

Multiple Choice

Financial ratios are only useful when they are compared to other ratios.All of the following are useful means of examining relative performance except

• A) Aggregate economy
• B) Industries
• C) Competitors
• D) Historical performance
• E) All of the above are relevant comparison measures for financial ratios

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Definitions:

Consumer Goods

Consumer Goods are products bought for consumption by the average consumer, distinguishing them from items used in production of other goods or services.

Capital Goods

Long-term assets like buildings, machinery, and equipment used in the production of goods and services.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, representing the benefits one misses out on when choosing one option over another.

Computer Simulation

The use of computer models to replicate the behavior of complex systems under various scenarios, often for analysis or prediction.