An Analyst Should Be Careful When Conducting Ratio Analysis to Ensure

question 51

Multiple Choice

An analyst should be careful when conducting ratio analysis to ensure that ________.

• A) the overall performance of a firm is not judged on a single ratio
• B) the role of inflation is ignored
• C) ratios being compared should be calculated using financial statements dated at different points in time during the year
• D) different accounting procedures are used

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Definitions:

Subjectively

Based on or influenced by personal feelings, tastes, or opinions.

Convergent Thinking

A cognitive process where an individual focuses on finding a single, correct solution to a problem, often involving the application of logical steps and rules.

Brainstorming

A group creativity technique designed to generate a large number of ideas for the solution to a problem.

Creative People

Individuals who frequently engage in the process of generating new, original, and worthwhile ideas or solutions.