Extraordinary Gains and Losses Are Usually Included in Ratio Analysis

question 11

True/False

Extraordinary gains and losses are usually included in ratio analysis, since they reflect on the annual operating performance of a firm.

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Definitions:

Leverage

The use of borrowed funds to increase the potential return of an investment.

Return on Stockholders' Equity

A measure of financial performance calculated by dividing net income by average shareholders' equity, indicating how effectively equity is used to generate profit.

Price-Earnings Ratio

A ratio for valuing a company that measures its current share price relative to its per-share earnings.

Market Price

The existing rate at which a service or commodity can be acquired or disposed of.