One Problem with Ratio Analysis Is That It Relies Upon

question 5

Multiple Choice

One problem with ratio analysis is that it relies upon:

• A) the accuracy of the investor calculating them
• B) the accuracy of financial reports
• C) the competence of financial brokerage services
• D) all of these choices

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Definitions:

Write Off

The accounting action of declaring that an asset is no longer collectible and recording its worth as zero, resulting in it being expensed.

Sales Revenue

The income received by a company from selling goods or services before any costs or expenses are subtracted.

Credit

The trust which allows one party to provide resources to another party wherein the second party does not reimburse the first party immediately but promises either to repay or return those resources at a later date.

Goods Received

The receipt of goods ordered by a company, often documented with a goods received note (GRN) that verifies the delivery and details of the goods.