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:

Business Income

The profit or loss generated from a company's activities after deducting expenses.

Emigration

The act of leaving one's resident country or region with the intent to settle elsewhere.

Total Output

Total output is the overall quantity of goods or services produced by a company, sector, or economy within a certain period.

Labor Cost

The total sum of all wages paid to employees, as well as the costs of employee benefits and payroll taxes paid by an employer.