Which Is True? Ratio Analysis

question 37

Multiple Choice

Which is true? Ratio analysis

• A)can provide useful information on a firm's current position but should never be used to forecast future performance.
• B)can provide useful information on a firm's current position and hint at future performance.
• C)can provide useful information on a firm's past but not current position.
• D)can provide useful information on a firm's past and current position, but should never be used to forecast future performance.

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Definitions:

Financing Section

Part of the cash flow statement that records cash activities related to funding the company, such as obtaining loans or issuing stock.

Statement of Cash Flows

A financial statement summarizing the total cash earnings from a company's operational activities and investments, alongside the expenses and investments paid out over a specific time frame.

Accounting Equation

A fundamental principle of accounting stating that assets equal liabilities plus owners' equity (Assets = Liabilities + Equity).

Liabilities

Financial obligations or debts owed by a business or individual to external parties or entities.