Which of the Following Statements Regarding Ratio Analysis Is Incorrect

question 58

Multiple Choice

Which of the following statements regarding ratio analysis is incorrect?

• A) Ratio analysis is a specific form of horizontal analysis.
• B) There are many different ratios available for evaluating a firm's performance.
• C) Some ratios involve an account from the balance sheet and one from the income statement.
• D) Ratio analysis involves making comparisons between different accounts in the same set of financial statements.

---

Definitions:

Common Stock

A type of equity ownership in a corporation, representing a claim on part of the company's profits and assets.

Dividends in Arrears

Outstanding dividend payments that have not been paid to preferred shareholders.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often with dividend payment preferences.

Redemption Value

The price at which an issuer can repurchase a bond or debt instrument before it reaches its due date.