Which of the Following Statements Is Correct

question 108

Multiple Choice

Which of the following statements is correct?

• A) Performing cross-sectional ratio analysis refers to assessing how a firm performed over a certain section of time.
• B) Performing cross-sectional analysis is easy since industries are usually clustered with firms that are identical.
• C) Time-series analysis is useless in assessing improvement or deterioration of ratios since the data is historical.
• D) To interpret financial ratios, users should analyze the performance of the firm over time and the performance of the firm against one or more companies in the same industry.

---

Definitions:

Price

The amount of money required to purchase a good or service; the value that must be exchanged to acquire a specific product.

Short-run Industry Supply

The total quantity of goods that producers in an industry are willing and able to sell at different prices in a short period, without changing production capacity.

Perfectly Competitive Market

A theoretical market structure characterized by infinite buyers and sellers, homogenous products, and no barriers to entry or exit.

Long-run Equilibrium

A state in which all factors of production and costs are variable, allowing firms to make adjustments until they reach a point of no economic profit or loss.