Which Two of the Following Represent the Most Effective Methods

question 76

Multiple Choice

Which two of the following represent the most effective methods of directly evaluating the financial performance of a firm?
I.comparing the financial statements of the firm to the financial statements of similar firms operating in other countries
II.comparing a firm's financial ratios to those of other firms in the firm's peer group who have similar operations
III.comparing the current financial ratios to those of the same firm from prior time periods
IV.comparing the financial ratios of the firm to the average ratios of all firms located in the same geographic area

• A)I and II only
• B)II and III only
• C)III and IV only
• D)I and IV only
• E)I and III only

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Definitions:

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together, revealing whether and how strongly pairs of variables are related.

Correlation

A statistical measure that expresses the extent to which two variables change together, but does not necessarily imply causation.

pH

A scale used to specify the acidity or basicity of an aqueous solution, with values ranging from 0 (highly acidic) to 14 (highly basic), and 7 being neutral.

Hardness

A measure of the resistance of a material to being scratched or indented.