What Is an Advantage of Using Ratio Analysis in Comparing

question 3

Multiple Choice

What is an advantage of using ratio analysis in comparing financial statements from different countries?

• A)Ratios are expressed as percentages, making currency differences irrelevant to the analysis.
• B)Ratios highlight the holding gains or losses related to currency translation.
• C)Purchasing power gains and losses from currency translation show up clearly in ratio analysis.
• D)Comparing business ratios across countries removes the effect of economic conditions and business culture.

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Definitions:

Term Deposit

A financial vehicle offered by banks that locks funds for a certain period, earning a specified interest rate.

Commercial Paper

An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories, and meeting short-term liabilities.

Simple Interest

Interest calculated only on the principal amount, or on that portion of the principal amount that remains unpaid.

Honda Canada Finance

The financial service arm of Honda in Canada, offering financing options for purchasing Honda vehicles, including loans and leases.