Which of the Following Is a Limitation of Ratio Analysis

question 96

Multiple Choice

Which of the following is a limitation of ratio analysis?

• A)Financial ratios cannot be used to assess a firm's profitability.
• B)Ratios that reveal large deviations from the norm merely indicate the possibility of a problem.
• C)It is difficult to access audited financial statements for ratio analysis.
• D)Ratio analysis assumes that inflation has no effect on a firm's business.

Grasp the basics of profit calculation and the role of costs in economic decisions.

Comprehend the nature of payments for different factors of production.

Recognize the scarcity and characteristics of natural resources.

Understand the economic concept of "no free lunch" and opportunity cost.

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Definitions:

Small Amounts

Referring to limited or minimal quantities, typically used in the context of finance, portions, or measurements.

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Raising funds for a project or enterprise by acquiring minor investments from a wide pool of contributors, primarily using the internet.