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:

Merchandise Inventory

The total cost of all goods that are available for sale during a certain period, including purchases and adjustments for returns or damages.

Inventory On Hand

Refers to the total amount of items or products available in stock by a business at any given time.

Debit Memo

A document issued by a buyer to a seller indicating a reduction of the amount due to the seller, often due to returned goods or discrepancy in billing.

Price Allowance

A reduction in the selling price, often used as a promotional strategy or to compensate for minor defects.