Ratios Should Not Be Used in Isolation Because

question 20

Multiple Choice

Ratios should not be used in isolation because:

• A)different ratios may give contradictory messages.
• B)their behaviour is interrelated.
• C)a decision will often have a number of aspects.
• D)all of the above.

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Definitions:

Amortization Expense

The systematic and gradual charge to expense of the cost of an intangible asset over its useful life.

Functional Currency

A redefined definition: The currency that a business uses for most of its transactions, reporting, and financial statements.

Capital Assets

Long-term tangible or intangible assets used in operations of a business that are not intended for sale in the regular course of business.

Exchange Rates

The rate at which one currency can be exchanged for another currency.