One Problem with Ratio Analysis Is That Relationships Can Be

question 96

True/False

One problem with ratio analysis is that relationships can be manipulated.For example, we know that if our current ratio is less than 1.0, then using some of our cash to pay off some of our current liabilities would cause the current ratio to increase and thus make the firm look stronger.

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Definitions:

Format Check

The process of reviewing and adjusting the layout, structure, and presentation of a document to ensure it meets specified standards.

Word Combinations

Specific arrangements of two or more words that together express a single idea.

Visible

Capable of being seen or readily perceived by the eye.

Contemporary Margin

A modern boundary or edge that separates trends, practices, or ideas.